Five important things to know about retirement
|Seniors often stay in the workforce for many years past regular retirement age, often because they don't have enough money to retire comfortably.|
Statistics from the United States Census Bureau state that 23 percent of Americans age 65 to 74 are still in the workforce. What are the driving forces behind a greater number of seniors still holding down jobs?
One factor may be that they didn't adequately provide for their retirement years and simply have to continue working.
Many people have misperceived notions about their retirement. As a result, they don't proactively save and make arrangements for the years when they want to retire. What worked for previous generations in terms of retirement may not be feasible in today's financial climate.
It's important to consider these facts about retirement early in a work career so that a person will be financially set when retirement age rolls around.
Social Security is not the sole answer for retirement security. Social Security payments will not singularly fund retirement for most people. It is conservative to expect that Social Security will amount to roughly one-third of a pre-retirement salary. Therefore if a person earns $50,000 annually, they would get in the area of $15,000 in Social Security benefits a year. You do the math ... it's difficult to live on that amount in this day and age. Plus, citizens have to wait until age 67 before you're eligible to collect full Social Security benefits.
Don't count on inheritances. Many parents or relatives are simply unable to earmark a large sum of funds for the purpose of inheritances. As healthcare costs continue to rise, money must be used to pay for that. Some people are also choosing to specify in their wills that money go to charity after their death and not to family members. Therefore, thinking an inheritance will allow a person to coast through retirement is impractical.
Pensions are a thing of the past. Largely, the idea of pensions is a concept once enjoyed by earlier generations. The majority of workers today are not entitled to a pension at the time of retirement. It's up to the individual to compensate for that lack of funds.
The sale of a home may not fund the retirement years. Even downsizing to a smaller home may not free up enough assets for retirement. Generally, financial advisors frown upon using assets from home sales to pay for retirement.
Many people could outlive planned retirement funds. Now that life expectancies have increased, planning for a few years of retirement (thinking a person will go on to a better place shortly after ceasing work) is foolish. Many healthy individuals go on to live 20+ years after retiring. That is why saving as much as can be saved during the working years is essential to securing a persons financial future in retirement years.