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.
