Picture yourself sitting on the back of a deep-sea fishing boat bobbing in baby blue waters in front of a horizon of islands and sky, surrounded by a coterie of smiling and doting — and possibly, attractive — companions. If you're like most workers in the U.S. today, there's a good chance you're just thinking of an infomercial you've seen, or something like it, and not what your life could look like in retirement.
While that may sound silly, the fact is that many Americans aren't making sufficient financial preparations for retirement.
According to the Employee Benefit Research Institute's Retirement Confidence Survey (RCS) for 2013, only 51 percent of workers who responded to the survey were very or somewhat confident that they would have enough money to live comfortably through their retirement years — down from 72 percent in 1995.
Even the 51 percent number sounds high, considering that the same survey found that 57 percent of workers had less than $25,000 in savings and investments not including the value of their home. Forty-six percent of workers had less than $10,000 in savings and investments.
Of course, some of those workers are relatively young, and have time to begin saving enough money to live comfortably in retirement. And some workers no doubt have living parents or others from whom they expect to inherit money before their own retirement.
But the lesson from the Retirement Confidence Survey is the same — that retirement looms as a potential problem for many — and it makes perfect sense that the survey reports that the age workers expect to retire has been rising in recent years. In addition, 69 percent of workers responding in the RCS expect to work after they retire; according to a Gallup poll taken in April 2013, that number is 75 percent.
Unfortunately, not everyone gets to retire when they want, or is able to work after retirement. The RCS, which also polls retirees, found that 47 percent of retirees who responded to the survey had retired sooner than planned. Of those individuals retiring early, 55 percent did so for negative reasons, such as health issues or disability, while just 32 percent stated that they retired early because they could afford to.
It bears keeping this in mind: that retirement is not necessarily something you choose; it may be foisted on you.
Statistics such as those in the RCS lead some commentators to make dire predictions about the future for retirees. Along with inadequate retirement savings, commentators point to factors such as increased life expectancy, low growth of investments, rising health care costs, inability of seniors to find paying work in retirement, and reduced government transfer payments to retirees.
Others are more optimistic, and many people assume that a retirement crisis, if it comes to that, will be averted by legislation of some kind.
But it's difficult to predict the future, and there may be no legislative fix forthcoming, if one is even possible (to say nothing of whether such a fix would be desirable).
It's a good idea, then, to spend time focusing on your own retirement. It's not much fun planning for life as an elderly, possibly infirm person and contemplating issues like death and disability. But if you don't think about these things, and prepare for them the best you can, it may be that no one does it for you. If someone else does end up doing your planning for you, chances are good you'd have done it differently.
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