Risks to Your Retirement Income
Assuming you’re a member of the Baby Boomer Generation, you’re likely giving serious thought to retirement – if you haven’t already stopped working. And if you have already left the 9-5 rat race, chances are that you’re wondering if you’re going to be able to remain comfortably retired.
Recent economic crisis compounds the situation even more by increasing some significant retirement oriented economic variables:
1. Life Expectancy Is Longer
Today, life expectancies are longer than their parents. For example, in 1970, a 60-year old white male had a life expectancy of an additional 16.2 years; however, by 2008, his life expectancy had stretched to twenty more years of life.
So how is the Boomer going to afford retirement during those extra 3.8 years? Following are several probable answers to that question:
> Add to current savings
> Work longer than planned
> Live with with relatives
> Expect a reduced standard of living
2. Health Care Costs Keep Rising
Predicting and planning for ways to cover one’s health care costs are among the most difficult financial planning tasks, largely because medical costs are so person-specific, with requirements varying substantially from one person to another. Long-term care needs are even harder to predict and fund.
Medical expenses have grown more than 5% (inflation adjusted) for the past 15 years – a rate that is greater than the growth in family income. Medicare costs will probably rise as well at similar rates.
3. Government Actions May Affect Retirement Benefits & Supplemental Programs
It is well known that the expenses associated with the major entitlement programs (e.g., Social Security, Medicare, and Medicaid) are growing faster than other parts of the economy, and some economists challenge the long-term feasibility of these programs because of the combined effects of increased longevity, size of the Boomer population, and increasing health care costs in general.
Further, current questions regarding continued health insurance in retirement, and at what financial levels, are rampant in today’s depressed economy – and these questions are further fueled by the reorganizations occurring, especially among the auto industry.
We are still witnessing much debate concerning a national health care system – but such discussions have been ongoing for decades, with few benefits to show for those efforts. Although President Obama will be leading a national health initiative this year, most people anticipate a lot of opposition from Congress.
Many expect that seniors past age 55 will be protected from reductions in these social programs, but maintaining complete coverage for them is a two-edged sword – doing so increases the likelihood of a new tax, which would likely add to retirement tax burdens.
4. Retirement Dates Are Frequently not Totally Up to the Individual
According to a 2004 Health and Retirement Survey (HRS), 37% of seniors are forced to retire. This can occur due to feeble health or downsizings, etc.
5. 401Ks Became 201Ks
Did your retirement savings (including your 401k) take a major hit with the stock market meltdown last year? My investments were deeply affected. Many comedians now refer to 401Ks as 201Ks because of the drop in the stock market. For many people, their 401k was the bulk of their retirement savings, so this stock market meltdown seiously damaged their retirement plans.
Humpty Dumpty Was No Financial Planner
But, the news is not all bad. You can fix a broken “nest egg”.
You can work longer, semi-retire and take a part-time job, work from home, start your own business, etc.
If you’d like to start an online business, but are hesitant because you’re not an internet expert, one superb starting point for securing all the knowledge about internet marketing that you’ll need to be successful is to join the Online Success for Beginners classes.
A report by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can improve annual retirement income by 9%, while working a total of five (5) extra years results in an extra 56% annual retirement income.
If you’d like to find out how to create a second income, so that you can have a rewarding, financially secure retirement, check out Darren Salkeld’s new MaxPro Marketing System and get his FREE Report and FREE Audio describing the age-old secrets of creating wealth.
Retirement Plans Up in the Air? Forced to Supplement Your Retirement Savings? is a post from: Free Internet Marketing Tools
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