The Retirement Crisis:
According to the latest information from the Centers for Disease Control, the average life expectancy is 78.6 years. If you’d like to retire at 62 years, you need to have at least 17 year’s worth of funds saved up. Unfortunately, less than half of Americans will have less than enough to maintain their living standard. Longer life expectancies, less help with retirement funding, and global circumstances are making it difficult to retire. Here are some of the effects, and what you can do about it to avoid the retirement crisis.
Saving for Retirement
More than 50% of workers don’t know how much they need to save for retirement. To avoid a retirement crisis, you need to determine how much money you need to retire. To sustain your standard of living, you should plan on 10 times the annual salary. Second, you shouldn’t take money out, even in an economic downturn. The challenge here is that as the markets fluctuate, the value of your retirement plan may drop.
Many people assume that if they don’t have enough to retire, they will face a retirement crisis. Unfortunately, many workers will not be able to complete this, due to circumstances outside their control. Some are forced into early retirement because their employer is downsizing. This means that workers will need to work more to be prepared financially for retirement.
Working While Retired
You’ve probably noticed that some women age 55–64 continue working. They are delaying retirement, and to avoid a retirement crisis, both genders are working more than in the past. According to EBRI, 71% work for income in retirement, and 31% of retirees claim they work for pay. The anticipation of needing to work stems from the belief they won’t be able to afford their lifestyle to fully retire.
Effect of Income Inequality
The US Bureau of Labor Statistics reports that women make a median wage per week less than men. The top 20% of households with the most income take in more than the other 80% and this continues to grow. As the cost of living continues to increase, workers are not gaining wage increases of the top earners. Women will need to save more to avoid a retirement crisis, regardless of gender, and pay inequalities.
Preparing for a Planned Retirement
Most people tend to put off retirement planning but need to avoid a retirement crisis, there are a few steps you can take.
Determine how much debt you have, and create a plan to pay it or see a financial advisor if you need assistance.
Figure out how much you need, estimate your monthly expenses, ensuring your account for health-care costs, and some activities you’d like to do.
Pull out your most recent Social Security statement, and get an estimate of how much you’ll receive in benefits.
Subtract your annual Social Security benefit from the annual income.
Add in any annual pension amount, as well as any other source of income-you anticipate.
Multiply the amount by the number of years you need to have saved up, either in savings or invested in stocks.
Look for more ways to reduce expenditures, and work to save as much as you can.
Look into other investment instruments that help you grow your assets, and work to establish a nest-egg.
Talk to a financial planner if you need assistance in creating a plan to avoid a retirement crisis.