Unfortunately, the retirement welcome mat is not welcoming at all for many soon to be retirees. Many are approaching and entering this phase of life with anxiety instead of anticipation. Years ago the retirement welcome mat was much friendlier but significant changes in the retirement landscape have caused this switch.
Pensions are a thing of the past: Most companies no longer offer pensions and instead are offering 401k plans. Although most companies will match a portion of an employee’s contributions the vast majority of the 401k contributions must be made by the employee. So the responsibility of building your nest egg is on you.
Healthcare costs: Companies’ pensions often included health insurance – with pensions going away and healthcare costs continuing to rise this has become a bigger burden on retirees. It is estimated that today’s average 65-year-old couple will spend $250,000 on healthcare costs during retirement.
Longevity: Good news is we are living longer and enjoying longer retirements. Bad news is we need to fund a 30 + year-long retirement. Making sure your nest egg lasts while still enjoying your retirement is a constant balancing act. The current low interest rate environment is not helping because putting your money in a FDIC insured CD that generates 5% is no longer an option.
Add inflation to these anxiety causing factors and it is understandable why people are worried about retiring. But there are ways to manage these factors:
- Work with a financial advisor that you trust.
- Understand your retirement plan.
Retirement is not a road to walk alone. I recommend that you find a financial advisor that you trust and trust starts with understanding the retirement plan. You should understand the retirement plan so well you can explain the approach to anyone. Only by understanding the plan can your truly retire with confidence.
My Piece by Piece™ retirement income model is a commonsense approach to retirement planning that my clients understand and can depend on so they can enjoy their passions.
by: Debbie Craig, CFP®, MBA, CRPS®