It seems unimaginable but 10,000 baby boomers turn 65 everyday and most of them will face retirement problems that they aren't even aware of. Baby boomers will face three problems in their pursuit of retirement.
First, most boomers will live longer than they anticipate. You might think that it is odd that I am referring to this likelihood as a problem but it will be a problem if they don't have enough money. Let's look at the facts on these 10,000 65 year olds that are retiring every day. The average life span of a man in the U.S. is around 81 and for women it is 86. However, that doesn't really tell the story. If a man reaches 65 he has an 81% chance of reaching 70, a 42% chance of reaching 80 and a 10% chance of reaching 90. For women the chances of longevity are even greater. A 65 year old woman has a 90% chance of reaching 70, 62% chance of reaching 80 and a 25% chance of reaching 90. Once you hit 65 you more than likely will live longer than you imagined.
The second problem relates to the first. Most boomers aren't saving enough for retirement. In fact, half of baby boomers haven't saved anything for retirement. This represents a major hurdle and a future hardship for boomer retirees who are going to live too many years in poverty and dependence. Boomers can start to rectify this problem by starting to aggressively save. By agressive I mean about 17% of your income. If you haven't been saving than this may seem like an impossibility.
The third problem is that most Americans, including seniors, don't understand Medicare costs well at all. While part A of Medicare is free the rest of it is not. In fact, many retirees who had great health plans in their jobs may actually find themselves spending more money for Medicare than they did for their company health insurance. The average cost of part B can be $109 to $140 a month. Plan C, medigap, can run from 0 to $300 a month but usually lower than plan B. Plan D drug coverage can run around $40 a month. So a couple could theoretically spend $550 to $650 a month for healthcare coverage. While the politicians push Medicare for all and many millennials think it's free the reality is it can be costly for many folks.
The moral of the story is to start saving for retirement early and generously to help preclude some of these problems.
First, most boomers will live longer than they anticipate. You might think that it is odd that I am referring to this likelihood as a problem but it will be a problem if they don't have enough money. Let's look at the facts on these 10,000 65 year olds that are retiring every day. The average life span of a man in the U.S. is around 81 and for women it is 86. However, that doesn't really tell the story. If a man reaches 65 he has an 81% chance of reaching 70, a 42% chance of reaching 80 and a 10% chance of reaching 90. For women the chances of longevity are even greater. A 65 year old woman has a 90% chance of reaching 70, 62% chance of reaching 80 and a 25% chance of reaching 90. Once you hit 65 you more than likely will live longer than you imagined.
The second problem relates to the first. Most boomers aren't saving enough for retirement. In fact, half of baby boomers haven't saved anything for retirement. This represents a major hurdle and a future hardship for boomer retirees who are going to live too many years in poverty and dependence. Boomers can start to rectify this problem by starting to aggressively save. By agressive I mean about 17% of your income. If you haven't been saving than this may seem like an impossibility.
The moral of the story is to start saving for retirement early and generously to help preclude some of these problems.
No comments:
Post a Comment