Ever since the global recession of 2008, retirement readiness had struck an all-time low. It’s not that that people had absolutely no issues related to retirement planning post recession but the situation had worsened somewhat over the last few years. A recent survey by a leading marketing firm among several hundreds of Americans revealed that a paltry 14% of people are confident of being able to live lavishly after retiring. The survey further highlighted that almost 60% of people had net savings worth less than $25,000, which is undoubtedly alarming to say the least.
Not saving adequate money for the future can easily be termed as the biggest retirement planning error. It may, however be understandable, especially given the challenging jobs picture. Ideally, every working individual should look to save a minimum of 10% of every single pay check. Listed below are five commonest retirement planning mistakes to be careful of:
Assuming everything will be under control while retiring: Most of us assume that we’ll quit only after a certain age. Now, nobody can say what’s waiting for us tomorrow. Statistics show that two out of five people retire much earlier than planned. Thinking why? Causes can be many, starting from illness to job loss. In such a scenario, one can’t be certain of being able to get a second job or work part time. So, it’s absolutely necessary that you starting saving for the future early- while your career and health both are on a strong footing.
Not Saving Sufficiently for Medical Requirements: Retirement healthcare plans are steadily fading away. The average couple quitting today at an age of 60 will spend no less than $3, 00,000 in health care expenses in retirement. Even for the ones on Medicare, out of pocket spending have shooed 50% over the last decade. You should, therefore, plan well in advance how to bear this expense without having to compromise your future post retirement.
Inability to Ensure Lifetime Income: Guaranteed pensions are quickly fading away too. One of the biggest challenges for people retiring today is converting life’s savings to a safe, reliable income stream to pave a way to secure adequate cover-fixed costs for life. Social Security can help. A fixed annuity is also an effective way to achieve this requirement.
Underestimating Longevity: With medical science advancing leaps and bounds, 65% of Americans live much longer than expected nowadays. At age 65, while a man can live to an average 81 years, the same average for women is 84. Many can even make it to the 90’s. Hence, to be absolutely safe, it’s critical to plan accordingly.
Drawing Retirement Savings Too Fast: In order to make sure that you never outlive your money, try to keep your yearly draw down rate to a maximum of 4% of your assets. At 4% withdrawal rate, if you start withdrawals at 65 years, you should have steady income for the next 30 years minimum.
Not saving adequate money for the future can easily be termed as the biggest retirement planning error. It may, however be understandable, especially given the challenging jobs picture. Ideally, every working individual should look to save a minimum of 10% of every single pay check. Listed below are five commonest retirement planning mistakes to be careful of:
Assuming everything will be under control while retiring: Most of us assume that we’ll quit only after a certain age. Now, nobody can say what’s waiting for us tomorrow. Statistics show that two out of five people retire much earlier than planned. Thinking why? Causes can be many, starting from illness to job loss. In such a scenario, one can’t be certain of being able to get a second job or work part time. So, it’s absolutely necessary that you starting saving for the future early- while your career and health both are on a strong footing.
Not Saving Sufficiently for Medical Requirements: Retirement healthcare plans are steadily fading away. The average couple quitting today at an age of 60 will spend no less than $3, 00,000 in health care expenses in retirement. Even for the ones on Medicare, out of pocket spending have shooed 50% over the last decade. You should, therefore, plan well in advance how to bear this expense without having to compromise your future post retirement.
Inability to Ensure Lifetime Income: Guaranteed pensions are quickly fading away too. One of the biggest challenges for people retiring today is converting life’s savings to a safe, reliable income stream to pave a way to secure adequate cover-fixed costs for life. Social Security can help. A fixed annuity is also an effective way to achieve this requirement.
Underestimating Longevity: With medical science advancing leaps and bounds, 65% of Americans live much longer than expected nowadays. At age 65, while a man can live to an average 81 years, the same average for women is 84. Many can even make it to the 90’s. Hence, to be absolutely safe, it’s critical to plan accordingly.
Drawing Retirement Savings Too Fast: In order to make sure that you never outlive your money, try to keep your yearly draw down rate to a maximum of 4% of your assets. At 4% withdrawal rate, if you start withdrawals at 65 years, you should have steady income for the next 30 years minimum.