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.
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. Many of us
have changed 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
- 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.
- 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
to save.
- 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.
Not
too long ago, people 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 dollars 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.
You
could take a crash course
in investment 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.
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 not
saved enough for retirement.
Even if your love to travel,
you can establish and build
a business 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 for more information.
