Preparing for the Risks in Retirement

In previous generations, paying off your mortgage before retirement was a priority. But baby boomers are taking mortgages into retirement because they’ve been paying down their children’s college debt and their parents’ long-term care bills. This is a huge departure from traditional retirement trends.

For most Americans, the extra cost of a mortgage is going to force significant changes in the way you live out your retirement. What you put aside today will determine your retirement lifestyle tomorrow. It doesn’t matter if you’re late to the savings game as a baby boomer; just starting to save as millennial or in the thick of it as a Gen Xer, just start saving!

If your employer offers a 401(k) plan and matches some portion of your contribution, do it. It’s free money! But contributing to a 401(k) will not enough. Even adding the income from Social Security benefits may not be enough. Most Americans will have to work longer than full retirement age and will live a hybrid retirement lifestyle that includes—at least—part-time work in their 70s. Lurking in the background of this new retirement paradigm is the mortality revolution. The longevity phenomenon will impart the culture of retirement like no other risk. If the average female lives almost 89 years, then half the female population will live past that. What will the baby boomer lifestyle look like when you’re in your 90s?

Keep in mind that longevity is also a retirement risk multiplier. Living longer will exacerbate all other retirement risks: depleting resources, increasing medical bills and, at the very least, paying for assisted home living. Domestic spending is directly tied to the cost of goods and services. Inflation, as gauged by the government consumer price index generally doesn’t address the real cost of senior living, so the purchasing power of your retirement dollars will simply buy less. Remember, the economy has cyclical patterns to it. Inflation may not be an issue today, but may return with a vengeance tomorrow. Retirement planning is undergoing a major overhaul. When it’s all said and done, it will not resemblance your parent’s retirements.

https://www.youtube.com/watch?v=vLRUoCcOybo&feature=youtu.be

For more information on how you can prepare for the risks of living longer in retirement, just go to onthemoneynews.com and request you free information.

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