Retirement Plans At Risk? Are You Needing to Supplement Your Retirement Income?

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Risks Threatening Current – or Future – Retirees

If you’re among the “Baby Boomers,” you’re likely giving serious thought to retirement, if you haven’t already retired – and if you are already retired, you’re probably evaluating whether you’re going to be able to stay retired.

Today’s recessionary economy complicates the retirement question substantially by increasing the following retirement related risks:

1. Life Expectancy Has Been Extended

Today, 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 an additional 16.2 years; however, by 2008 his life expectancy had expanded to 20 additional years.

So how is the senior going to afford to pay for those bonus 3.8 years? There are only a few probable answers to that question:

> Supplement current savings

> Continue to work longer

> Move in with relatives

> Expect a reduced standard of living

2. Spiraling Health Care Costs

Predicting and planning for ways to cover one’s health care costs are some of the most difficult financial planning tasks, largely because medical costs are so individualistic, with requirements varying greatly between spouses. Long-term care needs are even more difficult to predict and fund.

Health care costs have risen more than 5% (inflation adjusted) for the past 15 years – a rate that is higher than the increase in family income. Medicare costs are expected to rise similarly.

3. Legislative Changes May Affect Retirement Benefits & Benefit Programs

It is well known that the costs of major social programs (e.g., Social Security, Medicare, and Medicaid) are growing more rapidly than other parts of the economy, and some experts challenge the long-term feasibility of these programs because of the combined effects of increased longevity, size of the Boomer population, and rising health care costs in general.

Further, immediate questions concerning ongoing health insurance in retirement, and at what benefit levels, are wide-spread in today’s economy – and these questions are given even more fuel by auto industry, and other, corporate reorganizations.

We are still witnessing a lot of debate concerning a national health care program – but such discussions have been active for decades, with few benefits to show for those efforts. Although President Obama will be leading a national health initiative this year, most people expect Congress to present a lot of opposition (although maybe it will be a bit easier now that the Senate will soon be welcoming its 60th Democratic Senator).

Most people think that people over age 55 will be protected from cuts in these social programs, but maintaining full coverage for them is a two-edged sword – doing so increases the probability 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 Totally Up to the Individual

According to a 2004 Health and Retirement Survey (HRS), 37% are forced to retire. This can occur due to feeble health or economic downturns, etc.

5. 401Ks Have Been Decimated

Were your savings (including your 401k) devastated with the stock market crash in 2008? My investments were deeply affected. 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 significantly damaged their retirement plans.

Humpty Dumpty Had It Wrong

Some of the news is good news. You can fix a broken “nest egg”.

You can work longer, semi-retire and take a part-time job, work from home, start your own business, etc.

A study by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can augment 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 find out how to generate a second income, so that you can have a comfortable, financially secure retirement, check out Darren Salkeld’s new IIP MaxPro System and get his FREE Report and FREE Audio describing the age-old secrets of creating wealth.

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