Everyone wants to retire with financial security. Yet, recent studies have shown that only 47% of women and 57% of men are saving for retirement. In light of the fact that the single greatest fear in retirement is running out of money, things do not bode well of pre-retirees today. In fact, the Center for Retirement Research has found that more than half of all working households are at risk of being unable to keep up their standard of living in retirement.
To make matters worse for both pre-retirees and those in retirement now, health care expenses are accelerating at much higher rates than other costs and the prospects of higher taxes are looming just over the horizon. It is now estimated that an average couple will spend over $242,000 in retirement for healthcare expenses, and that doesn’t include expenses for Long Term Nursing Care which can now run close to $100,000 per year (note that it is estimated that 50% of people over the age of 65 will need Long Term Nursing Care in their lifetime).
This is not a pretty picture for many people. So what is one to do? How are you supposed to prepare for your financial future and well-being? The bottom line is to remember that, beginning right now, to realize that you have the power and control to change the cycle and not become another failing statistic.
Empowering yourself is not as complicated as you might think. It all beings with a plan. Unplanned retirements are the retirements that are most likely to fail. A well planned retirement, however, will give you the maximum quality of retirement life and peace of mind you can have.
What does a good plan do? It prepares you for every situation you may face in the future. And, even if something arises that you had not planned for, a well-constructed plan will flex and enable you to handle that situation well. Frankly, in my opinion, you can never over-prepare via a well-made plan.
The first step is to know your income and expense. It’s remarkable to me how many people wing their budget. While that might work for today, those people will pay the price in the future when they enter into their retirement years. You can either write down what you’re spending month to month or use some of the great online programs. Check out www.mint.com. It’s the one I use personally and with many of my clients. Once you know your budget you are going to find that there are areas where you are spending more money that you though and there are savings opportunities that you didn’t even know you had.
While you are building your plan, I suggest creating two separate personal savings accounts. One savings account should be for the unexpected costs that may come in the near future; car repairs, home repairs, hospital and medical costs etc… the second savings account should be for your retirement. Even if you have a company savings retirement program that you contribute to, start this account on your own. Now, even if it’s a small amount, put aside what you can into this account. Most people find, as they see this account grow, the find more and more than they thought possible to deposit into it. You will be surprised, when it’s time to retire, how much will be in this separate account.
Remember, the world has changed. In the past we could rely on Social Security and a great Pension to take care of us through retirement. While Social Security is still here (what will happen in the future is still in question), pensions are disappearing at a rapid rate, replaced by 401k’s which value typically rises and falls with the markets, leaving many questions as what I will be worth at the beginning of retirement.
You can retire financially secure! If you plan well, budget well, save with a purpose, and invest wisely, the chances of your creating a secure, confident and comfortable retirement are high. Don’t become that half of retirees who will have to lower their lifestyle in retirement. You deserve more than that and success is right there for the taking. Create your plan now!