We live in a culture where instant gratification has become the expectation in many circles, and long-term thinking has fallen by the wayside to some extent. This is certainly a problem when it comes to being prepared enough financially to be able to retire.
Sometimes it is best to strip things down to their most rudimentary form to get a true picture, so let’s get down to the basics.
The average life expectancy in the United States is between 78 and 79 years right now. But, the “oldest old,” which is a term that is used to describe people who are 85 years of age and older, is the fastest-growing segment of our population. So if you look at the typical retirement age being in the mid-to-late 60s, retirement involves being able to pay your way financially without working for perhaps 10, 20, or 25 years, and maybe even longer. The average individual is going to have to plan ahead carefully to be able to retire comfortably, especially if he or she is passionate about wanting to leave behind a significant legacy to family members.
A lot of people find themselves unprepared because they are under the impression that Social Security will provide them with sufficient retirement income. Unless you are willing and able to live on a very sparse income, Social Security is probably not going to be enough. The average monthly Social Security benefit at this time is $1072 per month, and even if you qualify for more than the average the income that you will derive is not going to allow for a truly robust retirement budget.
And if you are relying heavily on Social Security, another challenge exists. Due to the size of the federal deficit spending cuts are on the way, and many lawmakers are targeting Social Security and Medicare. They could easily reduce spending by raising the full retirement age, which is now somewhere between 66 or 67 depending on the year you were born. Of course, any increases in benefits are likely to be hard to come by in the years to come.
The solution would be to feather your own nest and develop a plan that enables you to retire without a great deal of dependence on Social Security. If you’re not sure about where to begin, simply arrange for a consultation with an experienced, savvy retirement planning attorney.
- Important Subjects to Discuss with Your Estate Planning Attorney - January 23, 2023
- Planning for the Possibility of Dementia - January 20, 2023
- How to Prepare for Retirement - January 17, 2023
