As middle age progresses and career aspirations decline, you start contemplating the possibilities of life after work or retirement.
Despite many individuals’ anticipation of retirement, millions of adults will never realize their post-work ambitions. An alarming majority of working adults in the United States fail to plan early enough, adequately enough, or with sufficient foresight to cover all potential retirement expenses, resulting in a national retirement crisis.
Retirement is an unstoppable train barreling down the tracks for many American employees. It will occur regardless of circumstances, but its arrival may be agonizing. 38% of those surveyed by the Federal Reserve in 2014 had no retirement plans and intended to work as long as possible. This percentage is significantly higher in low-income communities; among those surveyed with an annual income of $40,000 or less, 55% have no intention of ever retiring. Although 55% of respondents were optimistic about the future, 53% said they would be unable to cover a $400 emergency if they encountered daily problems.
A similar study by the Economic Policy Institute in 2016 came to the same conclusion: just under half of working-age families (ages 39 to 61) have no retirement savings. The average savings for households in this income bracket is $5,000, or two months’ living expenses.
Unfortunately, many factors work against the American people, particularly those who hope to rely on future government assistance. Social Security and Medicare provide many benefits to retirees, but neither program can support a person’s lifestyle entirely or substantially.
Social Security, for instance, has deviated substantially from its original design, leaving the program’s future uncertain. When Social Security was introduced, benefits were intended to cover only the final years of life, and the average life expectancy was lower than the program’s benefit eligibility age of 63. As average lifespans increase, the number of years that Social Security must pay out benefits to each working American continues to rise, placing a constant strain on a program that is already under stress. While many politicians strive to ensure Social Security’s sustainability, the future remains terrifyingly uncertain.
Lack of foresight.
How much would you need to retire comfortably if you were forced to do so tomorrow? How long will your savings last, and what expenses will likely rise as you get older? These are all critical questions to address, but few adults just beginning to plan for retirement can accurately predict the future of their lives.
On average, retirees from the middle class spend between $40,000 and $50,000 per year to maintain their standard of living. This amount may be more significant early on – travel, dining, and amusement expenses tend to rise in the years following employment – but it may grow with increased housing and medical requirements later on, necessitating a substantial nest fund to avoid making sacrifices later in life. The more you earn and spend now, the more you are likely to spend in retirement, which is why there is no one-size-fits-all approach to planning. With over a quarter of Americans saving without guidance, even the greatest intentions can lead to difficulties in the future.
Where to Search
Unfortunately, many individuals do not understand the significance of retirement savings to financial stability. The average American cannot calculate expected retirement expenses, assess risk tolerance, construct an asset allocation, or even determine where to start saving. Those who require resources have access to them, thankfully.
In retirement planning, a professional is your greatest asset. Financial advisors and/or experts in retirement income know what it takes to plan for the future. These professionals can assist you in determining the monetary worth of your goals, offer insightful advice on how to achieve them, and provide a framework to help you stick to a savings plan. A retirement expert will draft a road map for you to ensure you are making the right decisions before it is too late.
There are measures you can take to confront the future’s unpredictability head-on. Regardless of your current position, saving yourself from America’s developing retirement crisis is possible by taking a realistic look at your retirement objectives, progress, and preparations.