The term retirement comes with mixed feelings and reactions among most people. Some are usually waiting for it, while others dread those future years. Retirement requires finances as much as the working years. Therefore, people need to work on savings and investments for future purposes. Spending your entire income today will bring struggle in the coming days. Here are some interesting statistics to consider and work on as you prepare for your retirement.
Young People Fantasize of Retiring Early but Change Their Minds As They Grow Older
When one is young and ambitious, they picture life with different lenses than when life starts bringing them to reality. Most youth in their twenties would like to be off work in their late fifties or early sixties. However, by the time they get to thirty years and see the reality of earning a living, their dreams fade away, and they prefer working longer.
You May Take Longer in Retirement than Expected
The statistics for average life expectancy lie at 78 years. However, many healthy people surpass that age and go into their mid-eighties. So, when planning for your retirement, consider these years and save up enough finances to cater for you for twenty or more years after retirement. Most Americans believe in this long life and focus their energy and assets on their old age.
Most Americans Use Their Retirement Money before Time
While others save for retirement, others are dipping into the money beforehand. About 46% of those in their 40s have already started using the money in the retirement plan. Though this may be due to financial constraints, it brings financial crisis in the future. When situations get tough, people tend to go to their savings money with the notion that they will refund it. Unfortunately, this rarely happens, so the saved money decreases every time. The consequences are unpleasant for those who do this, and the experts advise you to use other methods to source finances instead of taking out the retirement funds.
33% of the Population Doesn’t Have a Retirement Plan
Research shows that only 77% of Americans save up for their days after work. Some do so through job-related schemes, while others use alternative savings plans. Though this is a good figure, the amounts still do not satisfy. Most of those saving do not build up enough financial muscle to sustain them through the years ahead. The recommended age to start saving for your retirement is 27 years. Consistent savings earn you a monthly payment of $310, which is very little money and may not be sufficient to maintain the living standard that one kept during their working years.
Social Security isn’t Dependable
Many people assume that they can depend on social security once they retire. However, the latest news suggests that by 2035 there will be a drop in payments made by social security. The older population will increase by almost 20 million people, making them more than the youth. Thus, those saving will be less than those receiving payments, making the finances scarce. With more people to finance, the authorities must redistribute the limited resources to cover more ground. Therefore, there is a probability that the amounts will drop, and new retirees will have lesser money to survive.
Early Retirement Can Change Your Plans
It is possible to keep your goal at the expected age of 66 for retirement during your energetic years. However, there is a chance that life takes an unexpected turn and forces you to retire at an early age. To most people, this makes your life change instantly without prior preparations. Some sources for early retirement are layoffs, health issues, and family responsibilities. Statistics show that 50% of retired people had to step down from work before their preferred time due to unavoidable circumstances. The circumstances usually bring a crisis and make them think of alternative sources of income.
To maintain the living standard you enjoy now in your working years, you need to save more than half a million dollars; since you may not have a source of income in those days, you have to ensure you save up enough to finance your living. Unfortunately, this amount is unattainable to most people. Because of this reason, the living standards of many Americans change when they stop working. Some start living a cheaper life, while others depend on the younger generation to finance their lifestyle. Investments can keep you from being dependent and changing from the affluent lifestyle.
Assisted Living Services and Nursing Homes are Costly
Though most people prefer assisted living due to the lack of a family member to take care of them, this comes at a high financial cost. According to the department of health, almost all elderly persons over 65 need these services at some point. Though the costs are significantly high, they cannot do without professional assistance. The survey shows that the average price for assisted living lies at approximately $4000 a month. However, this is the preferred option since a nursing home costs more than double. On the other hand, those that cannot afford these care facilities opt for insurance services for their lives after sixty years.
Statistics prove that most Americans are not ready for retirement, including those who are almost retiring. The expenses overwhelm the amount saved, leading most people to look for alternative income sources when they should be resting. If you are looking forward to having peaceful and enjoyable retirement, you should start saving early enough. Put more effort into savings, invest wisely, and don’t rely on one income source. You will have assets to use in your future life and cushion you from harsh living standards once you start saving. You should also keep away from money and avoid the temptations to dip into it from time to time. Make hay while the sun shines.