Retirement Planning In The 21st Century
Should You Retire?
There are a lot of reasons to stay on the job. Maybe you have an emotional preference for your office chair or perhaps you think your work is just too important to leave behind.
The truth is that there are many reasons to leave a job and just as many not to leave. For most people, a career that spans 30 years quite enough. But is an early retirement realistic for you? Let’s take a look at some stuff.
When you’re 50, the government says you’ll live about another 33 years (that’s from Social Security’s Actuarial tables). That 33 year retirement may be longer than your complete working career.
Life expectancy is increasing by leaps and bounds with advances in medicine and technology and you might want to think in terms of a 40-year retirement. Maybe you should ask another question. Should you retire in the first place?
Rising costs and political uncertainty is causing a lot of people to have questions about the future. This alone makes it extremely important to figure out how to finance a successful retirement and how to get the most out of what we have.
What Will Retirement Cost?
Besides travel, golf, fishing, and classes in macrame, what else would you like to have on the agenda? How much will your retirement cost? Will you have enough income to do it all? If you’re nevertheless saving for retirement, how much more has to come out of each paycheck to raise that much stash? Good question! Lets get the answer!
One thing I didn’t think about was inflation and how much stuff will cost in 15 or 20 years. After all, if you look 20 years into the future you can bet that the $50K that looks like a good annual income now will certainly have to be larger to buy the same things then as it does today. Inflation can have an impact on how far your money goes.
But what’s inflation going to be by the years? Any figure you come up with is probably good enough to get you by the first year of retirement. We can guess what inflation will be and calculate what impact will it have over the 40 years after that?
Where To Retire?
Where are you going to live? With luck, the mortgage will be paid off so all you have to worry about for housing is character taxes and maintenance. Maybe you can sell out and downsize into a smaller place in a warmer climate. Sure beats having to shovel snow when you’re 70 years old, already if it is further away from family and friends. Besides, you don’t see the kids that much any more and they can always come for a visit.
You should probably think about insurance, too. You’re probably insured under group policies by work for disability, life, and health coverage right now. In fact, your employer probably kicks in part of or maybe already the complete premium for that wonderful insurance.
If you retire, you might lose that insurance coverage. Then what happens to your spouse and family if you’re inconsiderate enough to die at a young age? How will you pay for a major illness or hospitalization and all of the accompanying physician’s bills if (heaven forbid) you should become permanently disabled?
You can probably forget about getting government help. You’re way too young for either Social Security or Medicare to apply. And already if you do qualify, government assistance may not be enough for a survivor and all the medical bills? If that’s the case, what are your alternatives? What about long-term care costs if you need it?
About now you’re probably thinking: “Hmmm, perhaps I should have a few more children to help sustain me in my old age.” Don’t worry, you don’t need more children. But you might not be able to leave your job. I’m just kidding about that. I’m positive you can retire at any age without having to increase the population or stay chained to a desk.