If you watched your parents and grandparents retire comfortably, it can be easy to slip into an attitude of complacency about retirement. After all, they made it look so easy! But the following four trends may impact the current generation of workers to a much greater degree than the previous generation, underscoring the importance of saving all you can for retirement.
You will most likely live longer than your parents and grandparents.
In the 1950s, the average life expectancy was 68 years old – just a few years after most people retired! But today, we can expect to live to an average of 79 years. That means we will enjoy our retirement for at least a decade longer than previous generations, but that’s also another decade that we will live on a fixed income based on our life savings!
Pensions are quickly becoming a thing of the past.
Your parents and grandparents might have retired on a pension from their former employers. But today, pensions are becoming less common as most companies abandon this retirement funding option. Now, more workers are offered defined contribution plans such as a 401(k). These are great, tax-advantaged savings options, but they do place more of the responsibility squarely on your shoulders.
The cost of health care is rapidly rising.
For several decades, the cost of health care increased at two to three times the inflation rate. Even with inflation near zero today, health care is rising by 2 to 4 percent annually. Medicare won’t cover all of your medical bills and prescriptions, and supplemental insurance will only relieve some of the burden. In short, you should expect to pay much more for health care than your parents did.
The Social Security program has changed.
Social Security was never meant to fully fund anyone’s retirement, and was designed to provide supplementary income only. But in the 1980s, growing strain on the program’s budget prompted lawmakers to make changes that will affect you. The “full retirement age” was increased, so you will have to work a bit longer before you can claim your benefits. Also, there is a greater chance that you will pay income taxes on your Social Security benefits.
These issues will impact each retiree in slightly different ways. But the main point that you should remember is that your retirement may be very different from that of your grandparents and parents. Your retirement plan should reflect these differences. Schedule a meeting with us to discuss your savings strategy, to make sure you’re on the right track toward a stable future.
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.