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.
