The Right And Wrong Way To Think About Retirement

Retirement is both one of the most exciting and potentially frightening times in our lives. That’s because after decades of working hard and sometimes defining ourselves by our jobs this represents one of the biggest changes most people will ever go through. But given that a 2017 bankrate survey found that the average family has been badly undersaving for this momentous life transition, it’s natural that many people’s biggest concern is that their retirement plans will have to be pushed off for years, if not indefinitely.

Age Median Household Retirement Savings
20’s $31,000
30’s $31,600
40’s $67,000
50 to 55 $125,000
56 to 61 $164,000

(Source: Bankrate.com)

But here are some important considerations that you may not have thought of, which can make the difference between enjoying a high standard of living and feeling you’re missing out on your golden years.

You Might Live Longer Than You Think

Retirement is a relatively new concept in human history. For example in the US in 1870 of those who lived to 65 or older 90% of men still worked. Today that figure is less than 20%. But keep in mind that didn’t include a lot of people since in 1917 the average life expectancy for Americans was 51. In contrast the average retirement age today is 62.

Now there is a lot of concern among Americans, and understandably so, about that age going up over time. In fact some in Congress want to push up the full retirement age to as high as 70 as a means of reforming social security to help solve its fiscal crisis. That’s because the current social security trust fund will be depleted by 2034 and require 23% benefit reductions in order to fund itself via payroll taxes (at it was designed to be).

That’s certainly a major problem and in a future article I’ll explore the complex issue of bolstering social security in detail. But the fact is that most Americans can expect to live far longer than they might have considered likely. For example according to the Social Security Administration those men/women who retired at 65 in 1990 could expect to live about 15 and 20 years beyond that, respectively.

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