Retirement and financial planning is easy to talk about when you’re a financial expert or a finance writer. Being involved or immersed in financial matters on a daily basis is the best way to make sure that you are financially stable but, frankly, the average consumer does not have this luxury. Indeed, as you’ll see from the following survey information gathered by Franklin Templeton in 2013, there are several statistics about retirement planning that are actually quite scary (and a bit depressing).
We’ve brought them to you today because, for some people, the only way to really get them to start saving for retirement is to scare the hell out of them. Enjoy!
Incredibly, 20% of Americans say that they plan to never retire. For these people, the decision to keep working for their entire life is more than likely due to the fact that they have insufficiently planned for their retirement and also have not done much in the way of saving. The problem is that, as we get older, our bodies begin to fail both physically and mentally. Sure, working past the age of 65 might be feasible for some people and, at 75, there are certainly going to be at least a few people that can keep working but, in many cases, health problems will make this simply impossible. In other words, not planning on retiring and thus putting no money aside for retirement is not really a very good idea.
On the other end of the spectrum are the 33% of Americans who were forced to retire. The fact is, the choice to retire may not exactly be your choice and, if your company downsizes or you develop a serious health problem, you may be forced to retire well before you had planned. In some cases you may actually have to do that in order to take care of a loved one. In some cases being forced to retire early May actually have a silver lining and allow a person to kick-start a new career, find part-time work or make money from home. However, depending on this silver lining can be financially dangerous.
Incredibly, the 46% of consumers who haven’t yet started saving for retirement expected that running out of money will be their top concern once they are. Frankly, if your past your 20s and haven’t started saving for retirement you should already be worrying about running out of money. While it’s possible that you are among the very few people who don’t need to worry (rich parents and inheritance comes to mind) if you don’t do some type of simple retirement planning you’ll never know how much money you actually have, what you can do to put money in a retirement fund and how much exactly you’ll need. Not knowing and not planning is not a good idea.
If you are between the age of 45 and 54 then you’re possibly one of the 31% of Americans who haven’t started saving for retirement yet. This is actually quite frightening because, if you are between these ages, the possibility of forced retirement is much greater and, unless you have a decent retirement nest egg, you’re probably going to be in grave financial trouble. It’s not all good news however as a little bit of retirement planning done right now can profoundly and positively affect your financial situation. Yes it’s true that you might have to work a few extra years or take on a second job as well as downsizing your home and cutting back on expenses but, with a little bit of planning and diligence, it still can be done.
The survey also showed that over half of all people with less than 10 years until retirement have less than $100,000 in their retirement accounts. The fact is, very few people can live on the average $15,000 per year that Social Security offers and, with even those funds looking to run out in the next 20 years, relying on Social Security is not a viable retirement option.
Finally there’s the fact that 62% of Americans have $50,000 or less put aside for retirement. The thing is, if you’re still young, you add to your retirement funds regularly and you invest them effectively, you may still be in good shape and be able to retire comfortably. In fact, it’s not unreasonable for most people to aim for having $1 million in retirement funds by the time they retire. If you take the recommended 4% withdrawal per year out of your account that means $40,000 in your first year (adjusted for inflation and investment performance, of course).
In the end everyone’s financial situation is different. These statistics above may or may not apply to you but, if you’re an American, they probably do. How much money you’re going to ultimately need during retirement depends on quite a few factors. At the end of the day, your retirement years should be some of the best of your life but, unfortunately, due to health concerns and financial concerns many people struggle greatly. If you’d rather not struggle during retirement, now would be a good time to start putting away as much money as you possibly can. Good luck and, if you need help doing that, please let us know and we’ll get back to you ASAP.