Retirement Problems in America

ny wills and estates attorneyAmericans are facing downward mobility during their retirement years. Americans simply have not saved enough money to meet their retirement expectations. In a study conducted in 2010, it showed that 3/4 of the Americans approaching their retirement years had approximately $30,000 or less in savings.

What’s Needed to Maintain Your Standard of Living in Retirement?

It is estimated, to maintain a family’s standard of living, approximately twenty times the family’s annual income is needed to be accumulated in savings. Under this theory, a man earning $50,000 per year, living by himself, would need approximately $1,000,000 in savings to retire and maintain his standard of living. This is in addition to what he will receive from Social Security Benefits.

Retirement Solutions

Two potential retirement solutions are: (1) work longer and retire later, and (2) die young. I suspect the second option won’t be popular. Recent studies show approximately half of the Americans questioned about retirement, felt that their standard of living would decrease.

401(k)s and IRAs

401(k)s and IRAs have for the large part replaced defined benefit pension plans. Under defined benefit pension plans an individual receives a certain amount each year during the course of his retirement. These plans still exist for individuals employed by the Cities, States, the Federal government and some large corporations. However, the large majority of Americans are going to be relying on 401(k)s and Individual Retirement Accounts (IRAs) to fund their retirement years. This is what is referred to as a do-it-yourself retirement system. Unfortunately most Americans do not start saving early enough and long enough to accumulate enough money in their 401(k)s or IRA plans to fund their retirement. Many 401(k) plans give their participants the ability to borrow against these plans. Studies have shown borrowing against the 401(k) plans further reduces the individual’s ability to accumulate enough funds in retirement.

My retirement solution is to keep working and avoid retirement!

help in financial planning for retirementElliot S. Schlissel, Esq. has been drafting wills and trusts, and representing clients regarding probating wills for more than 30 years.

Spinning the mindset of the retirees – Why should the baby boom end with a whimper?

Between the years 1946 and 1964, around 78 million Americans were born and this generation came to be termed as the baby boomers. Undoubtedly the hard work of the boomers contributed a lot to shape the US economy in the last 40 years but this entire generation is approaching their retirement age. It was in 2006 that the first few baby boomers crossed the age of 60 and immediately 4 million baby boomers are not set to turn to their retirement age (60) year after year throughout the next 2 decades. The way we thought about retirement was entirely changed by this huge population as majority of the safety programs which were there in place for the previous generations have all disappeared as the boomers are nearing their retirement. There was always a dire need of a new strategy for generating income, which should be strikingly different from that of the parents of the boomers. Read on the concerns of this article to know how retirement planning has shifted focus and some possible solutions to their issues.

Changing lifestyles might mean increased expenses for the retirees

Previously, retirees were satiated with simply “getting by” during retirement but now the boomers usually wait for their retirement so that they might get an opportunity to live the lifestyles that they’ve dreamt of and pursue their hobbies so as to get a steady source of income. There are many seniors who see retirement as the best time to indulge in shopping for gadgets, plan some trips with their family and also enjoy the money that they’ve earned. In a nutshell, nowadays, the baby boomers are more interested in leading an active and productive lifestyle. More activity will certainly mean more spending and this will need effective retirement planning.

Are the boomers living longer?

Yes, with the improvements in the medical facilities and the lifestyle that the boomers lead, the baby boomers who’ve reached 60 in the year 2007 might be predicted to live for another 23 years. In fact, there are instances when retirement lasts for 4 decades or even more. As the life expectancy has become longer, this would certainly mean that retirement income is needed to last longer lest the retirees fall in debt. The cost of living of the seniors has also increased and so the impending retirees require saving more. To avert the financial risks from ruining your retired life, you need to pay more attention to retirement savings and building your nest egg.

Transforming savings into income – The new retirement issue

Previously, both the baby boomers and the financial advisors have focused their efforts on accumulation of wealth. No previous generation has ever required to perform this feat of saving money and this is the reason behind this vexing issue among the boomers. The previous generations didn’t have to live solely on their savings and so there’s nothing from which the present generation boomers would learn the secret of transforming savings into income. The question that immediately comes to your mind is how much savings should you spend every year. Don’t scrimp too much as this will deprive you of living the life you’ve dreamt of but on the other hand, you shouldn’t overspend too. So what is the option?

Creating your own pension plan to make your retirement income last longer

In order to ensure that your income lasts throughout the entire retirement phase, you might consider having a steady source of income to fall back on. How about replacing the former company pension plan and replace it with a personal pension plan. Finding an advisor is perhaps the first step to income planning and there are improved models that will help you create a personal pension plan. Take into account your life expectancy, the cost of living and inflation, the tax obligations that you owe, the type of assets that you own and your lifestyle.

Low income, relying solely on Social Security benefits, making it to Medicare and continuing with some kind of job are what comprises the retirement age. Take the required steps to ensure leading your retired life in the best way possible. Avoid incurring debts and take debt relief steps to eliminate them as soon as you start accumulating.

Anjelica Cullin is an aspiring financial writer. A resident of Kansas city, Missouri. She has been contributing to many finance niche blogs and sites for last couple of years. Ms. Cullin is a guest contributory writer of our blog.

Retirement Planning

retirement planning attorneyToday, Americans are unprepared to move from their working lives into retirement. Simply stated, Americans simply just don’t save enough. Americans save less than 3% of their wages. It is estimated by financial planners the appropriate level of saving would be 10% of a family’s income. However, with more and more Americans living paycheck to paycheck, a 10% savings threshold falls on deaf ears.

Retirement Needs

As a rule of thumb, a retired individual will require approximately $200,000 in savings for every $1000 of monthly spending anticipated at the time of retirement. This is based on a return of approximately 5% per year. By example, should you have expenses of $3000 a month, for a period of 20 years you would need approximately $600,000 in retirement funds saved.

The average American family has approximately $45,000 in retirement savings. More than half of the American public are concerned they will not have enough money to support themselves for a period of at least 20 years of retirement. The outlook gets even bleaker should you be retired for 30 years instead of 25.

Retirement Ages Changing

Most Americans today plan on working until at least 66 years of age. This is significantly higher than retirement age of 57 which existed in the 1980’s.

Medical Expenses

Baby boomers need to be concerned Medicare benefits will be cut back during their period of retirement. This will cause an additional squeeze on retirement assets. It is estimated Medicare benefits will have to be cut back so the program does not run out of money.

About The Author

assistance in planning for retirementElliot S. Schlissel, Esq. is an elder care lawyer. He represents men and women concerning issues involving estate planning, drafting of wills and trusts and Medicaid planning. He can be reached for a consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.