When I practiced as a CPA and CFP (Certified Financial Planner) I learned that most people were VERY short on their retirement savings. Most people only start to save for retirement when they are ten years away from it. Many people I helped had no clue what life would even be like after they quit working. I helped some bored retirees with no purpose in life. These were part of the reasons I sold this business because there were so few who actually understood thrift and those that didn’t understand I really couldn’t help them become one of the 4% (see below).
The key to a successful transition from the work place is to be able to have options; the ability to choose how you wanted to live. Perhaps you know a retired person who sits home all day watching TV and not doing anything other than SURVIVING.
If nothing else I hope these U.S. Census Bureau stats open your eyes.
The stats that I see as most important are:
The percentage of Americans over 65 who rely “completely” on Social Security: 35%
That is one in three! I don’t know if you’ve followed Social Security’s solvency debate but it’s already bankrupt. That means that the amount of money being paid to retirees is more than the amount being paid in by working Americans. How long do you think that can last?
The percentage of Americans who don’t save anything for retirement: 36%
I don’t think many reading my blog are in this category but if you are I’m not sure what you were thinking. I hope you begin to explore ways to not be a drain on society. People who are in this category are probably in this stat:
Out of a 100 people who starts working at the age of 25, by the age 65, 63% will be dependent on Social Security, friends, relatives or charity.
This is a sad commentary to the lifestyles and work ethic of people today. America rewards those that work smart and hard. Yet I’ve seen a total reversal of people’s attitudes from being personally responsible to feeling “entitled.” Those feeling entitled will have a rude awaking when there is little support to take care of them in their later years.
Out of a 100 people who starts working at the age of 25, by the age of 65 only 4% will have adequate capital stowed away for retirement.
That means that 96% are NOT able to live the lifestyle they lived while they are working.
|Average retirement age||62|
|Average length of retirement||18 years|
|Average savings of a 50 year old||$43,797|
|Total cost for a couple over 65 to pay for medical treatment over a 20 year span||$215,000|
|Percentage of people ages 30-54 who believe they will not have enough money put away for retirement||80%|
|Percentage of Americans over 65 who rely completely on Social Security||35%|
|Percentage of Americans who don’t save anything for retirement||36%|
|Total Number of Americans who turn 65 per day||6,000|
|Percentage of population that is 65 years of age or older||13%|
|Out of 100 people who starts working at the age of 25, by the age 65:|
|Will be considered wealthy||1%|
|Have adequate capital stowed away for retirement||4%|
|Will still be working||3%|
|Are dependant on Social Security, friends, relatives or charity||63%|
|Americans older than 50 account for:|
|Percent of all financial assets||77%|
|Percent of total consumer demand||54%|
|Prescription drug purchases||77%|
|All over-the-counter drugs||61%|
|All luxury travel purchases||80%|
|Amount Needed in Savings For Retirement|
Monthly income need
Savings Needed for 20 Years
Savings Needed for 30 Years
|The above sums assume your portfolio will earn a 6 percent annualized return during the course of your retirement and endure 2 percent annual inflation erosion.|
Source: U.S. Census Bureau, Saperston Companies, Bankrate
While these stats may disturb you and even cause you to lose hope for your own “golden” years being golden, there is always hope. There are ways to capitalize on wealth creation concepts to actually move you into the 4% in approximately 4-7 years. Before the 2009 crash when I was 53 I was sitting pretty with a substantial net worth. Then in a matter of 9 months my “golden” nest egg turned into a “rotten” eggs. I was fortunate to find a better way and in less than four years become one of the 4% for a second time. So can you!