Can You Afford to Retire?
April 13, 2009Every segment of the media talks about the Baby Boomer generation which is fast growing into the retired generation. These people are considered to be those who were born during the years 1946 through 1964 and have either retired already or are still in the workforce and considering if they will ever be ready to afford retirement without falling below the poverty level.
Another group of Americans, younger than the Baby Boomers are in the workforce today but face an entirely different set of circumstances than those in careers in past decades. These younger workers face a world where it is unrealistic to expect to be employed by one organization for 30 years and then retiring with the gold watch and sizeable pension. That work landscape has become a part of the past.
Then there’s the Federal Government’s Social Security plan which clearly states on their own websites that people retiring now and in future years should develop retirement plans which will generate about 70% of the income they earned during their working years in order to keep up a similar lifestyle. Yet, these same websites go on to say that, on average, Social Security will provide only an average of around 40% of a retiree’s pre-retirement income! So, unless these future retirees have very good investments and savings portfolios to generate substantial income, they are not ready to afford retirement with a similar lifestyle as they enjoyed during their working years.
According to the Government Accounting Office (GAO) estimates, a couple earning an average income who will have income of around $20,000 per year from their Social Security at age 62 should plan to have investments and savings totaling $500,000 or more in order to generate a yearly income during retirement of only $46,000 total! Yet, many couples today, even with lowered living expenses anticipated during retirement will hardly survive on $46,000 per year.
Do You Have $500,000 Of Savings and Investments?
It isn’t difficult to figure out that a couple can manage to live on less than $46,000 per year with proper budgeting. But, there’s some bad news you need to think about. In the September, 2006 issue of AARP Bulleting, Stan Hinden wrote that over 1/2 of the people polled who are working currently and are approaching retirement (the 55 and over age group) reported they had saved very little toward retirement; in fact, their household savings were $50,000 or less. How can these people possible prepare to afford retirement? How could this happen to so many workers nearing retirement age?
* Few, if any, workers stay at one company for their entire work career, a practice that was quite common in their parents’ day. Not only do workers change jobs today, many people change careers, perhaps more than once, for a variety of reasons such as better opportunities or downsizing or outsourcing of their positions. This means that few workers become fully vested in the 401K plans offered by those employers who still offer such options. The results are that rollovers and payouts become small or even zero for many who change jobs or careers.
* Some of our plans turn out differently than expected. Many people have had their savings eaten away by huge medical costs. Insurance doesn’t cover some lifesaving procedures and when a loved one requires help, whether your spouse, your child or your parents, anyone can find their retirement savings reduced to only a small sum.
* Change is a part of life. Companies change retirement plans, couples divorce, or a company buyout results in loss of benefits. Suddenly, instead of having a sensible retirement plan, these future retirees find themselves having to attempt to catch up with these changes of plans.
* Everyone wants their children to enjoy a quality education including a university or even post-graduate education. Suddenly, parents find themselves taking loans against retirement plans such as 401Ks in order to manage the increasing cost of college tuition.
* Some people find their retirement plans changing as they become caregivers to elderly family members and must go from a nine-to-five career to either working from home or not working at all.
* Some future retirees simply have allowed their poor budgeting and spending habits to result in credit card debit. It can be impossible to save when paying off high interest debt.
* Some future retirees work as hard as possible their entire lives, live on a strict budget, yet still find there isn’t anything left to save toward affording a comfortable retirement.
* To top all these facts off, the purchasing power of money has not kept up so that raises in income are quickly eaten away by increased expenses. People are struggling to get from paycheck to paycheck..
In previous generations, a worked wanted to be faithful to one company, building a career for their entire work life. The company pension plan was incentive enough to get people to even continue in jobs they hated. They knew that once they grew old, the company’s pension would take care of them.
Today, the trend in companies is cost savings and that includes cuts in retirement benefits. There often isn’t a company pension to help in these retirees “golden years”. Reduction in health insurance benefits for retired workers make paying medical expenses a major worry for people seeking to afford retirement. People who can obtain insurance (many find they can’t qualify due to pre-existing conditions) find the cost of premiums, deductibles and co-payments for themselves and their spouses too costly to afford. Any Medicare benefits do not include any dental or reasonable vision care so retirees need to buy their own or pay the out-of-pocket cost of these expenses.
Retirement is lasting longer as people live longer. The future retiree suddenly has to begin worrying if they will live longer than their money will last. Some future retirees will live well into their 90s or even 100+ years and become sick and poor because their retirement funds have run out.
Companies are converting employee retirement funds into “cash balance plans” where employees are given lump sum settlements upon retirement which totals the money in the retirees’ pension plan or 401K. Then the retiree has to figure out how to invest to build their pension.
Unless a person becomes an investment expert, how can a person ensure these cash lump sums are wisely invested? Where and how does a person find trustworthy advisors? Well, there really are experts out there, but finding one you can trust can be difficult, especially with all the other worries associated with pending retirement.
Really, no current retirees or future retirees can feel entirely secure!
This paints a pretty scary picture, doesn’t it? Will you be able to afford retirement or will working the rest of your life be your only survival mechanism?
But there is some good news for retirees and future retirees: Those who take charge of their lives right now can choose what their retirement years will be like! There IS an answer!
It simply doesn’t matter if you remain home to care for children, the family or elderly family. It simply doesn’t matter whether you live in a city, village or rural area. It simply doesn’t matter how much you already have saved toward being able to afford retirement. You can build a business that only requires the Internet and a telephone and you can even keep up with your business as your travel.
Professions who have already succeeded at building their businesses will teach you exactly how to get out of the rut and into the fast lane to affording the retirement of your dreams. You simply won’t believe as quickly your life can be turned around completely!
Stop worrying about an uncertain future financially and economically. Start right now and take the first simply step toward a life you will control, enjoy and start thinking of the retirement dreams you wish to build with your own business. It is so easy to get started; just fill out the following form and get all the facts.
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