|When Can You Retire?|
More recently, the CBS also reported that more people than ever before expect to work past the age of 65, primarily because they need the money. Reality is beginning to set in for Baby Boomers.
The Retirement Situation for Baby Boomers
The November 2011 AARP Bulletin reported some alarming statistics. While the exact numbers have changed a little since that time, they are roughly the same.
* 31% of people over the age of 50 have credit card balances
* 44% have mortgage payments on their home
* In 50% of households of people over the age of 50, neither spouse is currently saving for retirement!
* The average monthly Social Security benefit is $1,182 a month (that amount was closer to $1,200 a month by 2015, although that is still depressingly low).
* In 2009, 22% of retirees relied on Social Security for at least 90% of their retirement income
* In 2010, 56% of Social Security beneficiaries were women ... and they often receive lower benefits than the average man
These statistics paint a discouraging picture about the future financial situation of the aging Baby Boomers. It may be time that more of us take a hard look at our investment income, and decide what we can do now to prepare for retirement. Although many of us assume that we will just keep on working forever, the reality is that it isn't always possible. Sometimes people get laid off in their 60's and find it difficult to find another job. In other cases, our health declines and we simply are not physically capable of continuing to work.
What Are Your Plans for Assisted Living?
Finally, think about what will happen to you if you need to go into assisted living. According to the Genworth 2011 Cost of Care Survey, the median annual cost of a one bedroom unit at an assisted living facility ranges from about $28,800 per person in Georgia to about $55,000 in Maine and Delaware. It is an extraordinary $66,000 in Alaska. Can you and your spouse afford to pay that?
There are options. The time to purchase long-term care insurance is when you are young and relatively healthy. Purchasing this insurance means you will have to save far less money to cover your future medical expenses.
How Much Will You Need to Retire?
The bottom line is that only you can figure out how much you will need to retire. Start by looking at your benefit estimates from Social Security. Compare that to your budget. Look at the difference between the two amounts.
Are there areas in your budget that will disappear by the time you retire? If possible, pay off all the bills you can. Look at all the ways you can get your budget as low as possible by retirement. Then compare the differences between the two amounts.
Let's assume you will still be short $800 a month or $9600 a year. If you are going to follow the 4% rule, which financial planners suggest as a way to make sure your money lasts the rest of your life, then you need to save 25 times the $9600 a month in order to have enough money to retire. That means, in this case, you will need to save $240,000. Obviously, the sooner you start, the easier it will be to save this amount of money.
If you don't think you can save this much, you need to figure out how you will cut your expenses or increase your retirement income ... perhaps by postponing your retirement.
Start planning early for a successful retirement.
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