Frightening Facts About Retirement

Are you planning a picture perfect retirement?  Do you dream of spending your Golden Years with paint brush, fishing pole or golf clubs in hand?  Although undoubtedly the day will come when you will have to stop working, whether you want to or not, your financial well-being may not be as comfortable as you had hoped.

According to Yahoo!Finance, in an article from U.S.News entitled "8 Scary Retirement Facts," the 2007 decline in the economy caused havoc for the retirement plans of substantial numbers of aging Baby Boomers.  Sadly enough, their financial problems may be even more severe because our life expectancy continues to climb, even as their savings dwindle.

Scary Facts About Retirement for the Baby Boomer Generation

Here are a few facts from the U.S.News article that you may want to consider as you work on your retirement nest egg:

1.  Today, one in six senior citizens is living below the poverty line, which is $22,350 for a family of four, and even less for a single person.

2.  Currently, there is one working age adult between the ages of 15 and 64 for every five senior citizens.  By 2050, the ratio will change to one working age adult for every three seniors.  There will be fewer working people to support us, and we will be living longer than ever!

3.  The number of senior citizens will more than double from 40 million to 89 million by 2050.  This will put a huge strain on the economy.

4.  Right now, the median cost of an assisted living facility is $3,300 a month.  In California, where I live, I have read estimates of $6,000 a month.  In Alaska, it is $6,813 a month.  Today, assisted living is not affordable for people who are living solely on Social Security.  This will become an even greater problem as we Baby Boomers age.  While Medicaid is often the payer of this expense for many low and moderate income retirees, this is one more burden that will be placed on the government and working adults.  Those who do not qualify for Medicaid will have to pay these costs out-of-pocket.

5.  The economic losses of a few years has already taken a toll on people who are age 55 and older.  This age group accounts for approximately 20% of all bankruptcies, often because of medical expenses.  Surprisingly, older Americans also have more credit card debt than younger adults.

6.  Baby Boomers will need to have more savings in the future than ever, just to survive during their retirement years.  For many people, their lack of savings will mean they will need to work much later in life than they had planned.  This will not be easy for the numerous Baby Boomers who lost their jobs during the recession, often forcing them to take their Social Security benefits earlier than they had planned.

7.  While some Baby Boomers do know that we need to save more, it appears that the message is not getting through to many Americans.  According to a 2009 Career Builder survey, over one-third of Americans admitted that they do not contribute to retirement accounts.

8.  Age discrimination continues to make it hard for senior citizens to find and keep jobs.

All this information may seem discouraging.  However, it is meant to be more of a warning to those who want to make sure they have done everything possible to prepare for their retirement.  Preparing for retirement certainly brings to mind the old saying, "Hope for the best and prepare for the worst!"  The better prepared we are, the more likely we will manage to have a comfortable retirement when the time comes.

If you are looking for information about financial planning, where to retire, medical concerns and changing family relationships, use the tabs or pull down menu at the top of this article to find links to hundreds of additional articles.

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Simplify Your Life for Retirement

As most of us approach retirement, we look forward to spending our free time doing all the things we have wanted to do for many years.  Now is the time when we can go to the beach, go fishing, spend time camping and hunting, write books, read books and enjoy all manner of relaxing pursuits.

However, if we want to make these things happen, one of the things most of us must consider is how to simplify our life.  We need to cut back on our expenses, and find ways to do the things we enjoy in the most affordable way possible.

This simplification can be a very empowering experience, as we learn ways to make life a little easier.  Below are some of the steps you may need to do before your retire, so that you can afford to relax once you stop working.

How to Simplify Your Life and Enjoy Your Retirement

Cut Your Housing Costs -- Can you move to a less expensive place?  Downsizing would not only save you money on mortgage and taxes, but also save you money on utilities.  Are there other housing costs that you can reduce?  For example, can you switch to a less expensive cable TV system; or use a Magic Jack rather than a traditional telephone line?  Look for all the ways you can cut your housing expenses to the bare minimum.

Consider Moving to a Retirement Community -- There are many reasons why moving to a retirement community could help you simplify your life.  Depending on the community, many of them have affordable housing, low cost or free entertainment, and a wide variety of ways to stay mentally and physically active.

Cut Other Costs -- Can you cut back on auto expenses, restaurant meals, cell phones bills, internet, etc?  Think of cost cutting as an adventure, and work together to find all the ways you can reduce your expenses.

Find Inexpensive Hobbies -- Whether you decide to stay in your current home or move to a retirement community, find hobbies that you can afford to enjoy. Whether you take up walking in your neighborhood, swim in the public pool in your community, see movies during low-cost matinees, join a book club, or take free classes, there are many activities available to senior citizens that are free or very low cost.

The Advantages of Simplifying your Life

When you cut your costs, you may find that you are also making your life easier in several ways.  For example, if you reduce the size of your residence, you will also need to spend less time cleaning and maintaining it. This alone will enable you to spend more time in leisure pursuits.

If you cut your expenses, you may find that you have less stress over your financial situation.  It may also enable you to retire a little sooner than you thought possible.

Don't wait until after you have quit your job.  Start simplifying your life as soon as you begin planning your retirement, so you have a realistic picture of how much money you need to live, and what it will take to really enjoy your post-retirement years.

If you are interested in learning about other ways to get the most out of your retirement, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles about financial planning, where to retire, health issues that can arise in retirement, changing family relationships and more.

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How to Save Money for Retirement

Look for Sales and Save Money
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In cased you missed them, there were some very scary statistics scattered throughout the October, 2011 AARP Bulletin.  In the years since then, things have not changed much.  Basically, they come down to the fact that people are not saving nearly enough money in order to retire.  Here is some of what they had to say:

Families that have a head of household who is between the ages of 60 and 70 have only saved about 25% of what they will need for retirement.  (p. 3)

About 53% of all families in the US do not think they have enough retirement savings in order to have a comfortable retirement.  (p. 28)

In addition, the AARP Bulletin showed the impact that inflation is having on family wealth.  Between 1989 and 2009, the full time income for a man increased only about 3%.  Meanwhile, the cost of a college education for a child increased 73%, the cost of health insurance premiums rose 182%, and the amount of debt being carried by the average middle class family rose 292%!  (p. 28)  No wonder many of us feel that we are working harder than ever, but have less to show for it.

What can we do?  As impossible as it may seem, we all need to learn how to save money before we retire.  Everyone who is 50 years old or older should sit down and take a realistic look at how much income they will have when they retire, and then begin living now as close to that amount of money as possible! At the very least, you should try to live on only 90% of your income and save the other 10%.  If you cannot live on 90% of your income now, how do you think that you will live on just half of it ... which is what is going to have to millions of Baby Boomers!?

For example, let's say the head of the household in your home will receive approximately $2,000 a month from Social Security when they turn 67.  Their spouse will be eligible for an additional $1,000 a month in spousal benefits from Social Security when they turn 67, too.  If you expect to have $100,000 in your IRA or 401K by the time you retire, that could consider investing in a 20 year annuity and you would receive $400 - $500 dollars extra a month, at today's rates.  This comes to $3,500 a month in potential retirement income, including Social Security and investment income.

What is your current cost of living?  If you spend a lot more than $3,500 a month, you should start making adjustments to your current expenses to see if you can bring them down.  What will you need to change?  Will you need to move to a less expensive home or apartment, buy a less expensive car, or pay off your loans?  Perhaps you need to shop more carefully, by buying less and purchasing what you need when it is on sale. 

If you simply cannot bring down your expenses after retirement, is it possible that you could increase the amount of money you are putting in your IRA or 401K, so that you will have more retirement savings to invest when you stop working? Where can you come up with the extra savings? Are there services you could eliminate or reduce now, such as cable TV or your house telephone line?  Whatever you decide to do, start making the changes now, while you are still working.  The longer you wait, the more difficult it will be to take the necessary steps to have a balanced budget after you retire. 

With the right retirement planning, you can turn things around and take control of your retirement years.  It really is possible for you to become part of the 25% of people who have adequately planned and are prepared to retire!

If you are interested in more detailed information about retirement financial planning, where to retire, possible health issues you might encounter, family relationships and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

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