If you are a US citizen and nearing retirement age, or as a forward-thinking person you are planning ahead for retirement, there are challenges in the 21st century that former retirees did not have to face. The main challenge is that our life expectancy has increased dramatically. For example, in 1950 the average life expectancy in the US was 68 years old. Now that number has increased by 10 years, making the current life expectancy in the US 78 years old. Many modern-day retirees are living well into their 80s and even 90s.
The average retirement age, however, has not increased nearly as dramatically, with the majority of workers retiring between the ages of 62-65. So that means a retired person could be looking at financing their lives for another 20-30 years after they stop working.
Another challenge new to the 21st century is that whereas traditionally defined benefit pension plans promised to pay workers a lifetime pension, those have largely disappeared in the private sector. What this means for anyone planning to retire is that you must be responsible for creating your own personal savings and retirement plan.
However, if investing in the stock market is part of your retirement plan, there is another added challenge. There have been four major stock market crashes since 1987, and financial experts foresee more in the future. To add insult to injury we must consider the rising cost of health care in the US and the extreme rise in the cost of health insurance.
As a result of all these challenges, most older American workers haven’t saved enough money to retire full time at age 65 under their pre-retirement standard of living, as measured by the amount of retirement income that’s realistic to expect from their savings and Social Security. This is the sobering conclusion of a recent report by the Stanford Center on Longevity (SCL).
Still, in spite of the gloomy financial outlook for US retirees, this article from Forbes states that it is still, ‘a good time to be aging.” There’s plenty of scientific and medical research that informs us how to live long, healthy lives. People are eating more healthy, making sure they get plenty of exercise, and just generally taking better care of their bodies. Social research shows what makes us happy and gives us meaning, particularly in our later years. There are many robust, efficient financial products and services, as well as nonprofit organizations like AARP, Area Agencies on Aging, and local nonprofit service groups that advocate for seniors and provide helpful resources. And these resources are at our fingertips because of the internet.
Your new “retirement job” is to face up to the challenges the Rules of Thumb blog from MoneyThumb has discussed in this post and to decide how to make the most of the gift of these extra years of life. There’s a good chance you will live a long time, so it only makes sense to take steps to live long and comfortably.