The "golden years" of your retirement are ideally filled with making memories with the grandchildren and taking all those globe-trotting trips you've always fantasized about — you needn't spend all that free time worrying about how you'll pay all the monthly bills.
"Men age 65 today can expect to live to 83, and women to almost 86, according to data from the National Center for Health Statistics. That also means, however, that you have a lot of living years you’re going to need to pay for," Time advises.
Time.com offered 3 moves to ensure you don’t run out of money:
- Time your career exit on your terms
- "Some 65% of baby boomers plan to stay on the job after age 65 or never retire, according to a recent survey by Transamerica Center for Retirement Studies. Working longer extends your saving while reducing the number of years you must cover. You also get a fatter Social Security benefit for every month before age 70 you delay taking it. But Time warns that you can’t count on your job lasting. Stay engaged in your current career… … or try one a new one. Boston College researchers found that in many professions people retire early because key abilities decline with age—dentists, for example, need to maintain fine motor control. In other jobs, older workers may lack cutting-edge skills. So by your fifties, take steps to extend your employability."
- Try a practice retirement first
- "Try the “pinch” test. For a month of your practice phase, live on a budget that fits a common annual withdrawal rule, such as taking out 3% to 4% of your nest egg the first year, to be increased in later years by inflation. (Take the yearly amount and divide by 12.)"
- Ease your way into a safer income stream
- "Investors looking for stability in frothy markets have poured $25 billion into indexed annuities so far in 2015. Right idea, wrong annuity. Unlike those complex and often cost-laden investments, a simpler tool called a fixed immediate annuity can be a good way to lock up guaranteed income. They aren’t so popular, though, with 2015 sales of about $5 billion."
To be sure, Americans are woefully unprepared for life after work.
“The lack of plans is fueling a retirement-savings crisis. Few workers save anything outside of employer-sponsored plans. Only 8 percent of taxpayers eligible to set aside money in an IRA or Roth IRA did so in 2010, according to the IRS,” Bloomberg News
“Forget for a moment the debate as to whether Social Security will be around (it's easily made solvent). At present, Social Security benefits average $15,700 a year, far below what most people need to replace the median U.S. salary of $53,657,” Bloomberg View’s Barry Ritholtz points out.
Then, he said, consider:
- Half of U.S. workers lack company-sponsored retirement plans.
- Only 45 percent of businesses with fewer than 100 employees offer 401(k)s.
- Those who work part time, or switch jobs frequently, or work at a small company, are less likely to have an employer-sponsored retirement plan.
“It's not just that the U.S. retirement situation is bad — it's that it's trending in the wrong direction,” he said.
To put it in perspective, runaway income inequality is producing grossly unfair retirement outcomes, according to a study from two progressive think tanks — the Center for Effective Government and the Institute for Policy Studies.
The top CEO retirement accounts are worth a combined $4.9 billion — equal to the total retirement account savings of the 41 percent of all American households with the lowest retirement wealth, Reuters cites the study as saying.
Among all Fortune 500 CEOs, the typical value is $17.7 million. That includes the present value of defined benefit pensions, 401(k) account balances and other deferred compensation.
(Newsmax wire services contributed to this report).
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