Retirement Plans At Risk? Need to Increase Your Retirement Savings?

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Retirement Plans At Risk? Need to Increase Your Retirement Savings?

Wednesday, October 14th, 2009    Subscribe To Our Feed

Risks Threatening Current – or Future – Retirees

If you’re a member of the “Baby Boomers,” you’re probably giving serious thought to retiring – if you haven’t already retired.  Even if you have previously retired, it’s likely that you’re considering if you’re financially able to continue to be comfortably retired.

Recent economic crisis aggravates the retirement question even more by compounding some significant retirement oriented risks:

1. Life Expectancy Has Increased

Current life expectancies are longer than their parents’ generation. For example, in 1970, a 60-year old white male would have had a life expectancy of only 16.2 years; but, by 2008, his life expectancy had stretched to 20 years.

So how is the Boomer going to afford retirement during those bonus 3.8 years? There are only a few likely solutions:

> Add to pre-retirement nest egg building

> Continue to work longer

> Live with with family members

> Accept quality of life

2. Health Care Costs Keep Rising

Adequately funding one’s medical care programs are some of the most difficult financial activities, largely because medical costs are so individualistic, with needs varying substantially from one person to another. Long-term care needs are even more difficult to predict and arrange adequate funding.

Health care costs have risen faster than 5% (inflation adjusted) for the past 15 years – a rate that is greater than the increase in family income. Medicare costs will probably rise as well similarly.

3. Government Actions May Affect Retirement Benefits & Benefit Programs

It has been widely reported that the costs associated with the major social programs (e.g., Social Security, Medicare, and Medicaid) are growing more rapidly than other sectors of the economy, and some economists question the long-term feasibility of these programs due to the combined effects of increased life expectancy, size of the retiring population, and rising health care costs in general.

Further, current questions concerning ongoing health insurance during retirement, and at what financial levels, are wide-spread in today’s economy – and these questions are given even more fuel by the reorganizations occurring, especially among the auto industry.

We are still witnessing much conversation about a national health care program – but such debates have been ongoing for decades, with few benefits to show for those efforts. Although President Obama will be leading a national health initiative this year, many people expect Congress to present a lot of opposition.

Most people think that people past age 55 will be protected from reductions in these social programs, but providing complete coverage for them is a two-edged sword – doing so increases the likelihood of a new value-added tax, which would effectively add to the tax burden for retirees.

4. Sometimes One’s Retirement Date is Dictated, and not a Free Choice

Per the 2004 Health and Retirement Survey (HRS), 37% of seniors are forced to retire. This can occur due to bad health or downsizings, etc.

5. 401Ks Have Been Decimated

Did your retirement savings (including your 401k) take a major hit with the stock market crash in 2008? My savings took a major hit. Many comedians now refer to 401Ks as 201Ks because of the drop in the stock market. For many people, their 401k was the bulk of their retirement savings, so this stock market crash has really damaged their retirement plans.

Humpty Dumpty Had It Wrong

But there is some good news. You can fix a broken egg – a broken retirement “Nest Egg,” that is.

You can work an extra year or two, take a part-time job or work from home to supplement your earnings, 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 excellent place to start for gleaning all the education about internet marketing that you will need to be successful is to sign up for the Online Success for Beginners classes.

A study by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can grow annual retirement income by 9%, while working a total of five (5) extra years can generate an extra 56% annual retirement income.

If you’d like to learn how to produce a supplemental income, so that you can have a luxurious, 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.