Can
You Afford to Retire?
You
hear it from every segment of the media: The Baby
Boomer generation is quickly becoming the "retirement
generation." While some boomers - defined as
those born between 1946 and 1964 - have already
retired, most are still working and wondering when
(or if) they'll be able to retire.
There
is another segment of the population, those younger
than the "baby boomer" generation, who
live in an entirely different work landscape - a
landscape where job security and working for a single
company for 30 years and retiring with a pension
is a thing of the past. Financial Planning is more important
than ever and with so many American's living beyond their means with credit,
retirement may never be an option.
The
federal government's own social security web site
states that most retirees will need about 70% of
their pre-retirement income to maintain the same
lifestyle. Yet
Social Security replaces on average
only 40%. That means you better have an impressive
portfolio of savings and investments ready to make
up the shortfall.
The
Government Accounting Office estimates that an average-income
couple who receives $20,000 annually from Social
Security at age 62 needs investments of over $500,000
to bring their annual retirement income up to $46,000.
Do
you have a portfolio of $500,000?
Okay,
so you can probably manage to live on less than
$46,000. But here is some not-so-good news. Stan
Hinden, in the September, 2006, AARP Bulletin
reports that more than half of workers 55 and over
state they've saved less than $50,000 for retirement.
How can that be?
-
People
in today's environment have not followed in
their parents' footsteps of staying in one job
forever. In fact for most of us that hasn't even been
an option and it would seem in today's business
climate that job security is a thing of the distant past.
Downsizing, outsourcing, corporate buy outs, lay offs and early
retirement are more the norm these days.
Many of us have changed jobs or careers a number
of times, sometimes for better pay, sometimes
because we got downsized or outsourced. Unfortunately,
changing jobs frequently means we've missed
out on becoming fully vested in some of our
employers' 401K
plans.
Our payouts or rollovers have been tiny or nonexistent and then there is the stock market where fat cat
Brokers and investment bankers get a free pass while corporate and municipal pensions are desperately underfunded.
-
Some
of our lives took turns we never imagined. We've
been overwhelmed by large medical expenses for
ourselves, our children, or our elderly parents.
These kinds of expenses can be real retirement wreckers.
We may have little more than a few thousand
dollars left.
-
Changes
like divorce often mean retirement savings,
even company retirement plans, are split between
spouses. When you say good-bye to a relationship,
you say good-bye to half the money in your retirement
plan, and you have to work hard and fast to
play catch-up.
-
We
wanted our kids to have college educations.
We borrowed from our 401Ks to finance ever-escalating
college costs.
-
Some
of us had to drop out of the workforce altogether
to care for elderly parents or grandchildren.
Unexpected health issues, work related disabilities
and other injuries have made working full time impossible for amny.
-
Some
of us are overextended due to poor spending
habits. Struggling to pay off credit cards leaves
little for retirement savings.
-
Some
of us have just plain worked hard our whole
lives and budgeted carefully, but have never
had much of anything left over for retirement savings.
-
There
has been no increase in real wages-that is,
purchasing power-since the mid-70s. Despite
the happy faces on TV, a lot of us are still
struggling just to get by and living on credit
beyond our means.
Not
too long ago, people enjoyed job security and worked for one company for
most of their adult lives, faithfully putting in
their time and counting the years until they could
retire and start to enjoy life. The company pension
was one reason people stayed at jobs they didn't
even like. "At least," they thought, "the
company will take care of me when I'm old. I won't
have to worry."
A
recent trend is for major companies to reduce retirement
benefits to workers who believed the company would
be there for them in their retirement years. Cuts
in post-retirement health insurance benefits are
the most unpredictable and the most worrisome for
people who are entering their 60s. The few people
who even qualify for such programs find that the
initial modest premiums and co-pays for themselves
and their spouses have skyrocketed to the point
where they are simply unaffordable. And by the way,
Medicare doesn't cover dental or vision care. People
can buy separate policies for these, but the coverage
is usually meager.
Then
there's the longevity "problem." As we
live longer and longer, our retirement savings must
stretch further. What if we run out of money? What
if we're old and sick and poor?
As
many companies convert employee pension funds into
"cash balance" plans, retiring employees
are given lump sums - the money you've accumulated
in your pension plan or 401K. At that point, you're
on your own to create a "do-it-yourself"
pension. Financial Planning isn't
something they expected to have to do and now with
no experience they are doing the best they can in voltile markets.
You
could take a crash course in financial planning.
You could hope you'll find a trustworthy financial
advisor, but there is no way to be 100% confident
about putting your financial future in the hands
of someone you barely know. Either way, it's difficult
to feel really secure about your financial future
in retirement, and the chances are you can't afford
to lose a bit of your nest egg to bad investments.
Quite
simply, neither today's nor tomorrow's retirees
can afford the luxury of feeling secure.
I just turned 50 and haven't been saving as aggressively as I should have for retirement
Cincinatti.com - September 2, 2010
Most financial advisers will tell you to save between 10 and 15 percent of your annual income - that is, if you're starting in your 20s. Retirement planning is a process and even at 50 you can put a plan of action in place that will allow you to meet most if not all of your goals. The first place to start is with your retirement plan at work ... |
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How much you expect to earn depends on your investment mix
USA Today - July 15, 2010
Baby Boomers who have been planning for retirement have recently found themselves rethinking their retirement strategy. With the stock market just finishing one of its most abysmal decades ever, it's natural for investors to reconsider... |
By
now, you've probably figured out where your retirement
prospects fall among all these possibilities.
You
might be wondering if you'll ever be able to retire,
or if you'll have to just keep working for the rest
of your life.
Yes, it's challenging. Yes, it's
scary.
But
there IS an answer. Instead of
letting other people determine how you will spend
your "golden years," you can take charge
of your life now.
It
doesn't matter if you must stay home to take
care of a spouse, parent, or child. It doesn't
matter where you live. It doesn't matter
if you're one of the many who has enough
retirement savings. Even if your love to travel, you
can start your own business and work from home using just the
Internet and a telephone. Successful professionals
will teach you how to stop trudging along on the
worry treadmill and start speeding down the road
to success. You will be amazed at how quickly you
can turn your life around!
The
sooner you get started, the sooner you can stop
worrying about an uncertain financial future and
let yourself think about all the wonderful possibilities
of a truly secure retirement. It's your life, and
you should be the one controlling it. Take the first
step today by filling out the form below to
request an interview.
