Are you Saving Enough for Retirement?
January 17, 2014 | By fischer |
Retirement can be a very difficult transition, yet it is one that most everyone looks forward to. And why not? It’s more than just an end to working full-time, for many, it’s a new beginning filled with new post-career opportunities.
Unfortunately, for many, the reality of retirement does not live up to the dream of what they thought it would be.
A Bleak Future for Working-Age Americans
A recent global study released by the HSBC, Life after work, projects a grim outlook for the aging population in the US
- Almost 1 in 5 working Americans say they can’t afford to completely retire any time soon, and expect to working indefinitely
- Those who have already saved for retirement are not as comfortable as they had thought they would be
- Nearly half of retirees were not able to realize their retirement goals. No boat, no European holiday, no luxury goods. They have saved enough money for 10 years, but not enough for one or two more decades.
Factors that Make Retirement a Challenge
There’s no single culprit to blame. The HSBC report points to several factors that contribute to the challenge of saving for retirement.
1. High level of unemployment. People are losing jobs and are thus unable to save enough for retirement.
2. Low wage growth. Many more are underemployed.
3. Daily cost of living. Blamed by 44% of those who haven’t saved. Others have to pay for their child’s education due to increasing costs of higher education, or buy a house. Serious illnesses and major life events may bleed people dry too.
4. Longer life expectancy. Today’s longer life expectancy requires retirees to save more, and puts a stress on existing retirement services.
5. High lifestyle expectations. People’s standards of living during retirement don’t change despite tougher economic times.
These factors may explain why personal savings rates are at their lowest levels since 1933 and why people’s retirement coffers are running dry.
A Retirement Rescue Plan
The grim retirement outlook will not only affect wannabe retirees. It’s likely to have far-reaching effects on children expecting to inherit money from their parents. In fact, more than a third of those surveyed said they can no longer afford to leave the legacy they had hoped for.
The good news is that retirement is still possible. Making it a reality demands proper planning, discipline and determination. It starts with honestly gauging your readiness for retirement.
Are you really prepared for retirement? Are you actually saving enough money? Your retirement rescue plan may require you to:
- implement significant lifestyle changes
- increase your investments (in addition to your retirement accounts)
- consider part-time work or semi-retirement
- reevaluate your retirement expectations
The formula sounds simple: focus on long-term planning, not on short-term spending. In reality, though, you may need outside help and advice. Contact us for more information.
Image courtesy of marin / FreeDigitalPhotos.net