Perhaps your parents made retirement planning look easy, but the future is looking quite different for new retirees. Numerous changes to our lifestyles, cost of living, and methods of planning all combine to make the future of retirement more challenging than it was for our parents.
For one thing, there will simply be more retirees in the world. Whereas there were 205 million people over the age of 60 in 1950, in 2017 there were almost a billion people of the same age group. By 2050 there will be more than 2.1 billion people over the age of 60. Governments will be pressed to equitably provide benefits to all.
A survey by life insurance company Aegon illuminated some of these challenges.
Lack of participation by employers. Only about 40 percent of workers have employers that contribute to a retirement plan. Less than 40 percent are consistently and independently contributing to their own retirement plans.
Lack of faith in government services. Over 90 percent of workers say that the government must do something about the cost of Social Security.
Lack of investment knowledge. Only 30 percent of future and current retirees demonstrate adequate financial knowledge.
Working in retirement. Aegon survey respondents estimate they will need 68 percent of their current annual income, but only a quarter of them predict they will be able to generate that much retirement income from savings, pension, and/or Social Security. In other words, it looks likely that many will need to continue working at least part time after retiring from their full-time careers.
Healthcare. While we’re living longer life spans these days, years added onto the ends of our lives are often expensive due to age-related health complications. Over one third of retirees said they were forced to retire earlier than planned, citing health concerns the most common reason for doing so. However, less than half of survey respondents considered the cost of healthcare when planning for retirement.
Luckily, policy makers are aware of these complications, and society is hopefully changing to meet some of the demand. But as you plan for retirement, remember to schedule regular appointments with us to discuss these concerns or any others that you might experience.