KEEPING ACTIVE – DAVE BERNARD – In an ideal world, we save throughout our lifetime to provide for a secure retirement where our bills will be paid and we enjoy free time to pursue those interests we love most. It’s not easy to survive the obstacles and crises that arise along the way, but somehow we do. We struggle valiantly to provide for the needs of the family through school and orthodontists and cars and whatever. And we hold relentlessly to the hope that if we can make it to retirement the road ahead might be a bit smoother with less unexpected turns to negotiate.
That is the way the story is supposed to go. That is what we prepare for and deserve. Retirement would be a great time for a slightly more predictable life. But that is not always the case as many are discovering.
Kids or Parents moving back home – By the time we reach retirement age, it is reasonable to assume we have done our part getting the kids raised and on their way toward independent lives. Sometimes it starts out just that way with everyone proud of the part they play. Then suddenly a career stalls or financial difficulties arise or some other wrench is thrown in to the machinery and the independent individual you raised finds herself back knocking on your door. And you love your child so what do you do? You deal with it as best you can.
No one wants to find themselves in the role of being the family bank. Yet 62 percent of people fifty and older find themselves providing financial support to family members. Unfortunately this unforeseen expense is seldom built into retirement planning considerations. The results can be disastrous when you consider the average expenditures can quickly be in the thousands of dollars a year. If retirees are already living on limited funds, where will the money come from?
To add insult to injury, those finding themselves in the unwanted role of supporting the family are typically those who were the most financially responsible during their working lives. They worked long hours and saved and sacrificed, doing without to provide for a more secure future for themselves. Unfortunately even with the best of planning, it is difficult to account for all possible financial contingencies that may be thrown our way.
Living too long – People are living longer. At the turn of the 20th century the average life expectancy was less than 50 years. Today retirees are living longer than any prior generation. Along with these bonus years comes the requirement for greater financial resources.
According to the Social Security Association, “If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between. However, monthly benefit amounts can differ substantially based on your retirement age.”
Here’s the catch – if you live beyond your average life expectancy which many are doing these days, the rules change. Had you waited longer to start receiving your benefits, you would get a higher monthly payment. You can add eight percent to the amount you receive for each year you delay receiving benefits between your full retirement age and age 70. This higher amount can be put to good use as you grow older and the bills keep coming.
Weathering an uncertain economy – The 2008 stock market crash wiped out trillions of dollars in savings. When the stock market eventually bottomed out in the first quarter of 2009, retirement accounts had lost about $2.7 trillion or 31 percent of their peak 2007 value. For someone living in retirement on a fixed budget, hits like this to savings can be impossible to recover from. Long removed from the job market, options to make up the lost money are few. It is enough to keep you up at night. The good news if there is any in the 2008 crash is that since 2009, retirement balances have increased reaching $9.5 trillion at the end of 2012—9 percent above their peak value in current dollars. So things could have been worse. But how will we all fare the next time?
Too much time on your hands – While you worked, you did not have to think about keeping busy during the day. The minute you walked in the door you were off and running and only hoped that by the end of your shift you could get through all of your duties. As a retiree, you assume responsibility for what activities will make up your day. Do you have enough variety to keep it interesting? Are there enough passions and hobbies and adventures to occupy the next 20 or more years? There are those who revel in exercising their personal choice to do nothing. Free from responsibilities with time on their hands they are happy to go with the flow and enjoy a work free existence. It’s all good. Whatever your recipe for happiness, however you choose to divide your day, retirement can be your chance to do it your way.
It is impossible to prepare for all the vicissitudes of life and retirement is no different. Although you cannot foresee all that will be you can do your part to look to your future and take reasonable steps to prepare yourself. A little time spent ahead of time might allow you the flexibility to make modifications and fine tune your plans to give the best chance for that totally excellent retirement you hope to live.