<strong>Risks to Your Retirement Income
If you’re a member of the “Baby Boomers,” you’re likely evaluating stopping work – provided that you haven’t already started your retirement. And if you have already left the 9-5 rat race, you may be wondering whether you’re financially able to afford to stay comfortably retired.
Recent economic crisis aggravates the retirement question considerably by increasing the following retirement related risks:
1. Average Life Expectancy Has Grown
People are living longer than their parents’ generation. For example, in 1970, a 60-year old white male had a life expectancy of an additional 16.2 years; however, by 2008, his life expectancy had climbed to twenty additional years.
So how is the retiree going be able to afford retirement during those additional 3.8 years? There are only a few probable solutions:
> Increase current savings
> Work beyond early retirement
> Move in with children or other family members
> Get by with a reduced standard of living
2. Rising Health Care Costs
Predicting and planning for ways to cover one’s medical care coverage are some of the most difficult financial activities, largely because requirements are so person-specific, with needs varying substantially from one person to another. Long-term care needs are even harder to predict and fund.
Health care expenses have grown more than 5% (inflation adjusted) for the past 15 years – a rate that is greater than the growth in family income. Medicare costs are expected to rise at similar rates.
3. Legislation May Reduce Retirement Income & Supplemental Programs
It has been widely reported that the costs associated with the major entitlement programs (e.g., Social Security, Medicare, and Medicaid) are growing more rapidly than other sectors of the economy, and some economists challenge their long-term viability because of the cumulative effects of increased longevity, size of the retiring population, and increasing health care expenses in general.
Moreover, immediate questions regarding continued health insurance in retirement, and at what financial levels, are rampant in today’s depressed economy – and these questions are further fueled by the reorganizations occurring, especially among the auto industry.
There is currently much discussion concerning a national health care system – but such discussions have been active for decades, with few results to show for those efforts. Although President Obama will be leading such efforts this year, many people expect Congress to present a lot of opposition.
Most people expect that people past age 55 will be protected from cuts in these entitlement programs, but providing full coverage for them is a two-edged sword – doing so increases the likelihood of a new value-added tax, which would likely add to the tax burden for retirees.
4. Sometimes One’s Retirement Date is Dictated, and not Freely Chosen
According to a 2004 Health and Retirement Survey (HRS), 37% are forced to retire due to feeble health or downsizings, etc.
5. 401Ks Became 201Ks
Were your savings (including your 401k) devastated with the stock market crash last year? My savings took a major hit. Many people saw their 401k and other stock market accounts take a 50% hit, which has led many comedians to rename them “201k”. For many people, their 401k was the bulk of their retirement savings, so this stock market meltdown has really damaged their retirement plans.
Humpty Dumpty Was Not a Retirement Expert
Not all the news is bad. Luckily, you can repair a broken “Nest Egg”.
You can work longer, semi-retire and take a part-time job, work from home, start your own business, etc.
If you’d like to start an online business, but are hesitant because you’re not an internet expert, a very good place to start for gaining all the understanding about internet marketing that you’ll need to be successful is to join the Online Success for Beginners program.
A study by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can raise annual retirement income by 9%, while working just five (5) extra years can generate an additional 56% annual retirement income.
If you’d like to learn how to create a supplemental income, so that you can have a rewarding, financially secure retirement, check out Darren Salkeld’s new MaxPro Marketing System and get his FREE Report and FREE Audio describing the age-old secrets of creating wealth.
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