A study by the TransAmerica Center for Retirement revealed a startling truth: nearly 80 percent of Americans believe they will have a harder time achieving financial security in retirement than the previous generation.
That’s a personal opinion, of course, but it’s backed up by some real trends. There are several major reasons that saving for retirement is tougher than ever…
You probably won’t get a pension. Fifty years ago, pension plans were a standard benefit for many American businesses. A pension guaranteed you a fixed payout, for as long as you lived, after you retired from your career. What security! Now, only 20 percent of Fortune 500 companies offer pensions (as opposed to 59 percent as recently as 1998). This means fewer workers are guaranteed any form of income in retirement, aside from Social Security (which also isn’t nearly as “guaranteed” as we think).
You might find yourself deep in debt. Back in 1968, Americans carried 1.3 billion dollars in debt. Today, that figure stands at more than 1 trillion dollars! Sure, inflation is a factor, but most of us owe far more to student loans and mortgage debt than our parents did. It’s hard to find room in your budget for much beyond the basic necessities, so saving for retirement falls by the wayside.
Healthcare costs are rising. Like pensions, many employers are dropping retiree health benefits. At the same time, the cost of healthcare has risen dramatically. A 65-year-old couple retiring today can expect to spend an average of $260,000 on out-of-pocket healthcare costs over the course of their retirement years.
You’re going to live longer than previous generations did. If you’re 65 years old today, you have a one in four chance of living page age 90. This is good news, of course, but it also means you will be living on your retirement income for longer.
You’re responsible for your own savings. Since pensions are disappearing and Social Security can’t provide all of your income in retirement, saving for the future is your responsibility. And yet, half of all Americans don’t even have a retirement plan benefit at work! That means you have to do the research and open an IRA on your own, or identify other income-generating vehicles for your retirement years.
On that note, give us a call. We can help you review your situation, identify ways to prepare for retirement, and get you on a better track to a more secure future.