Are You Running Out of Time?

In their 2014 survey, the Center for Retirement Research estimates that 52% of working-age adults were “at risk” in 2013 of not having enough assets or income when they retire.  According to the Employee Benefit Research Institute (EBRI) 20% of those 85 or older are dying with less than $10,000 including the value of their home.  Many more are woefully under prepared for longer life expectancies.

Often we hear that people plan to work longer to avoid spending what retirement savings they do have.  Unfortunately this may not be possible for many.  The EBRI found that 50% of retirees in its 2014 survey stopped working earlier than they had anticipated.  Of those, 60% cited health problems or disability, 27% pointed to changes at their company including downsizing and age discrimination, and 22% said they had to retire to care for a family member.  It is very likely that people’s plans to work longer in order to ease the burden on their retirement savings will not come to pass.

So if you are under 50 years old you had better start saving.  15% of your gross pay, invested into a well-diversified retirement plan which includes a healthy dose of stocks, combined with some portion of social security income should get you close to your pre-retirement income for the rest of your life.  But you have to start saving NOW.

And if you are over 50 years old and you have less than 10 times your annual living expenses in your retirement accounts – oh boy you really better get going.  You might just have enough time to catch up if you are very diligent in your savings.  You will need to put away a significant amount of money in order to retire with any semblance of your pre-retirement income.  You will never catch up to what you would have had if you started 20 years ago but that is water under the dam.  You need to do everything you can right now to make up for lost time.

Retirement does not cost less than pre-retirement.  It gets very expensive in later life with medical bills and assisted living expenses.  Having the life you want in the future takes great planning and diligence in the execution of that plan.  And you can’t count on being able to work later in life.  It’s better to plan now while you still are in control.  Let us know if we can help.