Are You Prepared For Retirement?

Senior couple is looking at the bills concerned

It is a fact that many people are not! People spend more time planning their summer vacation than they do planning for retirement. In an article in the USA Today paper the other day and found some interesting facts. Almost a third of the workers have less than $1000 in savings and investments that could be used for retirement, not counting the primary residence or defined benefit plans. 57% say they have less than $25,000. Those workers who say they and their spouses have a retirement plan, such as a 401(k), pension, or IRA 35% say they tucked away at least $100,000 only 3% of those without a plan have that much money saved. The percentage of homeowners 65 and older with mortgage debt increased from 22% 2001 to 30% in 2011. Among those ages 75 and older, the rate more than doubled, from 8.4% to 21.2%.

The Employees Benefits Research Institute says US families caring the highest loads of debt are those with heads of household age 55 to 64, they had an average debt level of $107,060. For an age group approaching retirement that is not a good thing. Many people plan to work longer but can’t. In fact, 67% of workers say they expect to work for pay during retirement years, but only 23% of retirees say they have worked for pay in retirement. People say that I am not saving so I plan on retiring much later but often times for reasons they can’t control, people are not able to retire as late as they want.

Another thing, people think Social Security will not be taxed. It used to be that way, not anymore. If your income exceeds certain amounts, then another tax will be leveled against your Social Security benefits and up to 85% of your Social Security benefits could be taxed. Something else people may not be aware of. If you are collecting Social Security, you must also collect Medicare Part A when you’re eligible. If you don’t accept Medicare Part A at that time you’ll forfeit Social Security benefits. And here’s the worst of it, Medicare is now means tested. This means Medicare now uses your income to determine what you’ll be paying for part B and part D premiums, and those increased premiums come right of your Social Security check. The above deduction from your Social Security is imposed because you receive too much income and were too successful.

If you retirement is tied up in the market, whether you retire wealthy, comfortably, and confidently depends entirely on the existence of a fair market at the time you retire. No one told you about this one, did they? Think about those people who retired in 2000, 2001, 2008 or 2009. Many who retired during those unfortunate years lost 30% to 70% of the retirement account value. Again, this may sound depressing, but if a market crash again rocks the economy such consequences may not be avoided.

Something else you should know that may not be aware of. During the many years you spend in your retirement, your precious retirement income is going to lose huge chunks of value because our government must, and will, be forced to install measures to keep itself afloat. The huge national debt is just part of it.

Living too long in retirement and running out of money is the number one fear for people in retirement. Retirement is a wonderful thing and should be enjoyed, but it is something that needs to be planned for starting immediately.

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