Are you on track toward your retirement goals? Or are you already aware that you need to be saving more? No matter how healthy or unhealthy your retirement account may be, it is important to continually reevaluate your plan.
Many of us saw our parents retire comfortably, and we tend to assume that our retirements will be just as easy. But today’s retirees are facing very different circumstances. The following four trends are ones to watch closely as you near your expected retirement date.
Life spans are increasing.
In the 1950s, people tended to live until about age 68. But our life expectancy has increased dramatically over the past sixty or so years, with the average retiree today living until an average age of 79 years old. For the next generation of retirees, that number is likely to increase even further! It’s great news that we will all enjoy longer lives, but the bad news is that we all must plan for retirements that last 20 or 30 years – or even more!
You probably don’t have a pension.
Your parents may have enjoyed a comfortable pension from their former employers, which guaranteed them income for the rest of their lives. But companies are increasingly phasing out pension plans, and replacing them with 401(k) options. The responsibility of saving for retirement falls more heavily on workers now, even if your company does offer some type of matching funds.
You will pay more for health care than ever before.
Over the past two decades, the cost of health care has outpaced inflation by two to three times. Even with the inflation rate currently near zero, health care expenses are rising by 2 to 4 percent each year. Since you can’t count on Medicare and supplemental insurance to cover all of your medical expenses, you must consider your out-of-pocket costs when you calculate your retirement budget.
The Social Security program is evolving.
Administrators have been forced to make changes to the Social Security program in order to keep the program solvent. Full retirement age has been redefined, so that you will have to wait a year or two longer before filing for benefits. And your parents probably didn’t have to pay taxes on their benefits, but today’s retirees can expect to do so.
Yes, the retirement horizon is changing drastically, but this doesn’t mean you can’t enjoy a comfortable retirement. Just make sure to plan early, and meet regularly with your financial advisor to adjust your strategy as your plans change.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.