What They Don’t Tell You About Retirement
The average retirement age in the United States currently sits at 62 years old. That said, the average fifty-year-old adult has only saved up approximately $44,000 as a nest-egg retirement investment. What are you missing in the puzzle of retirement?
Something’s Not Adding Up
The things soon-to-be or current retirees aren’t told about retirement can actually hurt them down the road. For instance, the average couple will spend over $200,000 on medical costs over a 20-year period in their retirement. This is clearly a problem because, as we just saw, the average 50-year-old adult only sets aside $44,000 for retirement.
Saving and Entitlement Problems
Perhaps the most troubling statistics about retirement involves the amount of people setting aside no money for their golden years, or the sheer number of people relying solely on Social Security to see them through retirement. Over one-third of adults aged 65 and over are relying solely on Social Security to take care of their retirement expenses. Nearly the same percentage of older adults save nothing whatsoever for retirement, and a shocking 36% of Americans save absolutely nothing for retirement.
Broke Retirement Dreams?
Two-fifths of baby boomers, according to data from the AARP, have plans to work until they die. Although this may sound surprising initially, only half of Americans have over $10,000 set aside for retirement. Most Americans attribute their worries over retirement to escalating daily expenses and rising medical costs. In addition, many baby boomers facing retirement were devastated by the recent sub-prime mortgage crisis. According to a Chicago, IL social security attorney, the national economy’s stagnation and slowing of real wages and take-home pay isn’t helping most Americans realize their retirement dreams.
How Much is Enough?
Retirement experts recommend you set aside around 70 percent of your regular yearly salary for each year of retirement. This figure assumes that you aren’t paying off any student loans, medical expenses or mortgages. If any of these conditions apply, you may need to continue earning 100 percent or more of your annual salary to retire comfortably and pay off all of your debts.
Soon-to-be or current retirees should budget all of their retirement options. Now is the time to get specific about your monthly expenses and where you would like to spend the rest of your days. If you sell off your home, that could translate to you only needing to save a portion of what you had previously planned to retire on. If, however, you or your spouse incur an illness near retirement, you may need to get more realistic about how much retirement will actually cost.
Budgeting Your Retirement
You should also realize your lifestyle in retirement may only vaguely resemble your lifestyle before retirement. That is, your medical expenses may escalate or you may unexpectedly fall ill. You should check to see whether Medicare will cover you or your spouse in case you get sick. Overall, these kinds of medical expenses are the biggest expense that retirees fail to see coming. As Horn & Kelley PC Attorneys at law remind us, you will need to take into account inflation as you project the amount of money you’ll need annually for retirement. Even if the inflation rate stays at a conservative two percent throughout your retirement, the $60,000 you’ve saved up annually could prove considerably less to retire on over a few decades.
Most Americans aren’t saving nearly enough for retirement. Over one-third of Americans, in fact, save nothing at all for retirement. Put the most amount of money you can into a 401(k) or 403(b) account in anticipation of retirement. The former account refers to a private sector retirement fund whereas the latter refers to a public sector retirement fund. Your employer will usually match the amount that you contribute to either of these funds.
Category: Retirement
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