If you’re aged 50 and beyond, retirement planning isn’t a pipe dream. It’s a looming reality, one where alarm bells sound off at every turn. And how could they not? News outlets feign a “doom and gloom” forecast.
“Boomers haven’t saved for their futures.”
“Your pension or 401k won’t bail you out.”
“Retirees underestimate out-of-pocket healthcare costs.”
Wow, baby boomers are pretty darn irresponsible. Note: that was complete sarcasm… complete and absolute. Because people outside of the financial sphere fail to realize that the world is advancing at warp speed. Investments and nest eggs, likewise, are having to atone just as quickly.
The fact is, we’re living longer than before. Healthcare costs keep moving the finish line further. College tuition puts an unbelievable dent into savings. Unexpected occurrences, like accidents and disabilities, curtail plans. Tax rates inhibit costs of living. And, psychological warfare (like the above headlines), plays heavily on our sense of financial confidence.
This happens to be the human experience. This also reveals why folks are shocked to find a counselor and confidant with their seasoned financial advisor. Ironically, advisors look past the numbers and see what others don’t: the ACTUAL bottom line.
And what is that?
Essentially, it’s an understanding that everyone has a different set of circumstances to account for where saving for retirement isn’t as clear-cut as an equation or formula. Instead, it’s a measure of our quality of life, both the tangible and intangible elements, and the culmination of our life’s work.
Yet, we’re quick to overgeneralize the habits of a population. Baby boomer retirement, and the bigger picture, gets mired behind modest surveys and polls. Small snapshots of tightly wound data do prove interesting. However, it’s easy to see why inflated rhetoric fans the flames of financial inadequacy. Not to mention, it doesn’t tell a whole story.
But we can all agree on this: doing nothing – saving nothing – is the worst option.
Saving for Retirement in Your 50’s and Beyond
Here’s how the nationwide numbers really stack up.
According to the U.S. Census Bureau…
- The average American retires at age 62
- By the year 2050, 20.7 percent of the population will be 65 years or older
- The estimated length of retirement hovers around 18 years
- Almost half of all retirees leave the workforce earlier than planned
- And, forced retirement (due to health issues, etc.) impacts up to 41 percent of folks, while another 14 percent find themselves in a caregiver role
Without a pension or savings, as well as unexpected hiccups, could you easily outlive your retirement funds? Yes, of course.
Has your mind entered into panic mode? Quite possibly.
It’s defeating to think that this aspirational, pie-in-the-sky lifestyle is a figment of our imagination. We often shut down or stress out (whichever comes first) at the thought of facing such a huge life transition. And, at the thought of running out of money.
Our advice: find a financial advisor who will account for the emotional and behavioral journey too. Psychologists believe when an individual is clear about their savings goals, they’re better equipped to take action such as solicit professional advice, enlist social support, and adopt greater self-control.
Financial Accountability: More Than a Numbers Game
Contrary to popular belief, financial advisement is not the dreaded money-pit. It’s the voice of reason and the equalizer between your internal timeline and the external volatility of the markets.
Electrical and IT Engineers…
Professors of Risk Management…
CPA’s…
Arguably the most analytical minds in the world have entrusted our team to look after their finances. It’s not a coincidence that we have maintained a 90 percent client retention rate. It’s a testament to the fact that retirement planning, done right, is not accomplished in a silo.
It’s a conversation. A vulnerable one.
It’s a process. A long-range feat.
It’s a kinship. A chance to make money our friend, not foe.
And, it’s a time where action can be exhilarating.
When it comes to retirement planning, here’s where the grass is truly greener. And, why due diligence should instill hope for the future.
State-Run Auto-IRA Programs
In the state of California, employers with five or more employees are now required to offer individual retirement plans as part of their benefits package. If the price tag proves too expensive, employees can fall back on CalSavers to make their contributions through payroll. As a pilot program, CalSavers mirrors a 401(k) plan, fueled by court rulings as “constitutional” in light of pensions ceasing to exist.
Recently, New Jersey’s governor signed a bill to enact the same leverage.
Extending Required Contributions
State administered initiatives will become more prevalent as living standards evolve. Perhaps that’s because the weight of retirement, the two-ton elephant, is taxing every income bracket. Even government officials are now feeling the push prompting unprecedented legislative moves.
In a new proposal under the Secure Act, IRA withdrawals would be raised to age 72. This means folks can keep working longer and keep contributing to their nest egg beyond the current cap, which is age 70 ½.
Financial Coaching
Financial Wellness programs – part of a coaching infrastructure inside of select companies – suggest anything but grim outcomes. In a substantial Financial Wellness Think Tank annual assessment that played out over a five-year period, the average employee retirement-plan contribution rate rose to 9.4 percent of pay in 2018, from only 6.3 percent in 2013.
Additionally, those who felt they were on track regarding their retirement goals weighed in at 57 percent, as compared to 21 percent in 2013.
So, while punching a retirement calculator seems easy enough, saving for the future is much less scary with a sounding board. Who’s yours?
Precision Financial Strategies is happy to help – beyond the headlines to the real horizon that awaits you.