There are some very predictable events in the life of a financial writer. For example, there are regular releases of surveys addressing how much retirement planning people have done and how prepared they are for retirement. And they're pretty much always depressing, if not shocking. For example, let's review some alarming numbers from Franklin Templeton's 2013 Retirement Income Strategies and Expectations (RISE) Survey.
20% plan on never retiring.
Many Americans have found that they simply must keep working for as long as they can, due to insufficient retirement planning and saving. "Never" is an extreme word, though. You may keep working past age 65 and even be working at 75, but at 85 or before that, it may just be impossible. Your health may not permit working, or there may just not be a job to be had.
33% retired due to circumstances beyond their control.
This is critical to consider for those planning to never retire. The choice may not be yours. You may end up downsized or may develop serious health problems, or may have to leave the workforce to care for a loved one. The little silver lining here is that while you might lose your job, you can probably generate some income without it, either by finding acceptable part-time work somewhere, or perhaps by taking matters into your own hands: preparing taxes, tutoring kids, dog-walking, consulting, taking in a boarder, selling items on eBay, knitting, being a handyperson for hire, and so on. In your financial planning, include some contingency plans.
46% who haven't started saving for retirement expect running out of money to be their top concern during retirement.
This would be hilarious if it weren't so sad. Just about everyone who hasn't started saving for retirement should worry about running out of money, not just 46%. Sure, maybe you're among the relatively few who needn't worry, but without retirement planning, without sitting down and running the numbers to see how much you have, how much you can accumulate, and how much you'll need, you'll never know.
31% ages 45 to 54 haven't started saving for retirement yet.
This is pretty frightening. If you're 45, you might be hoping to retire in 20 years. If you're 54, you might expect to work just 11 more years or so. And if you don't have a sizable nest egg under construction, you're probably in trouble. The good news is that all isn't lost. A little retirement planning and some actions taken now can have a profound effect on your financial situation. You might work some additional years, for example, or take on a second job for a few years. You could reallocate your investment money, if it's not deployed effectively. You might even decide to downsize your home and perhaps even move to a less expensive region in retirement.
56% of those with six to 10 years until retirement have $100,000 or less saved for retirement.
This is a concrete example of how precarious many people's futures are. If these folks are expecting to live off Social Security, amounting to $14,760 per year. Enter even twice that amount into your retirement planning calculations, and it probably still won't offer you a very comfy retirement.
62% have $50,000 or less saved for retirement.
Having $50,000 or even $20,000, can be OK -- if you're still young, you keep adding to it, and you invest it effectively. For most of us, though, that's way too small a sum. It's not unreasonable to aim for a million-dollar nest egg by the time we retire. Taking annual 4% withdrawals from that, as many advisors recommend, will yield $40,000 in the first year, adjusted in subsequent years for inflation or stock market performance. Everyone's situation is different, though, which is why you need to do your own retirement planning, or tap the services of a pro for some help. How much you'll ultimately need depends on the income you'll expect to receive in retirement (from Social Security, pensions, annuities, dividends, etc.), plus the size of your nest egg, along with how much you expect to spend. Retirement can cost more than you expect, especially incorporating possible health-care expenses.
Fortunately, you don't have to be among the sorry statistics above -- at least not all of them. Take time to do some retirement planning today, as the longer you wait, the harder it will be to have what you need. The more you know, the better off you'll likely be.
In your retirement planning, examine all the angles, including Social Security. It plays a key role in your financial security, no matter how much you end up collecting from it -- and by making smart decisions, you can position yourself to collect as much as possible. Let our retirement experts tell you how to do that, in our brand-new free report "Make Social Security Work Harder for You." I invite you to click here to get your copy today.
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