Today's retirement may look nothing like your parents' or
grandparents'. People live longer, benefits grow thinner, and health-care costs
rise. Review your financial situation and start planning early so that this new
retirement doesn't catch you unprepared.
The new environment you retire in is a very mixed bag –
there's good news, bad news and unpredictable elements. You can live longer
than ever, and stay active into your 70s, 80s and beyond. But to support a
longer life, you may end up working long past 65, even if you are reluctant to.
Your aging parents live longer and may need your help. Your adult children may
need financial support, too.
All these challenges require more planning than ever. It's
never too early to begin thinking and planning for the new retirement. Times
1. You may work past 65. The average retirement age was
57 in the 1990s. Now it's 62 and likely to continue to rise. It's great to keep
working if you love your job, but you may have to delay retirement or work
part-time because of insufficient savings – even if you hate what you do and
you can't wait to retire.
2. You have a longer retirement to finance. A man
reaching 65 today can expect to live until 84, and a woman 86, the Social
Security Administration says. And those are just averages. You may have 30 years
3. It may cost you more to be retired. My old 1990s
financial planning textbook says your living expenses typically decrease 20%
after you retire, but the new retirement carries a higher price tag – primarily
from increased health-care costs. Ballooning medical expenses can quickly
consume your savings.
4. You don't plan for one person. Perhaps your parents
are still alive when you retire. They may need a financial hand for medical and
living expenses. Your children or grandchildren may still rely on your support,
as young adults now take longer to reach financial independence.
5. Government benefits are spread thin. Social Security
for higher income retirees may end up with a haircut. Medicare also may go this
route, charging wealthier retirees more than poor retirees to avoid running out
Facing this new retirement, you need Social Security
alternatives and an investment portfolio that funds expenses for 30 or more
years. You need to rebalance and reconfigure that portfolio regularly to take
on board falling or rising interest rates, inflation or deflation and higher or
lower stock markets. The new retirement may also mean moving to a less
expensive or more tax-advantaged state – or out of the U.S. altogether.
here to access the full article on USA Today.