It's realistic to assume I might live to be 100 years old. Or even older. The demographics, and current life expectancies confirm that. If I had retired at age 60, that would have been 40 years of retirement. If I wait to age 70, it's still 30 years of retirement. It's a little mind-boggling to think about living that long, but the possibility is a reality.
Saving for retirement
This report examines the evidence on the cost of conflicted investment advice and its effects on Americans’ retirement savings, focusing on IRAs. Investment losses due to conflicted advice result from the incentives conflicted payments generate for financial advisers to steer savers into products or investment strategies that provide larger payments to the adviser but are not necessarily the best choice for the saver.
We’re about to pay the price for all the good times.
The purpose of the study was to evaluate Americans’ awareness of potential financial risks in retirement, how this awareness impacts the management of their finances with respect to retirement, and how Americans are managing the process of leaving the workforce.
72% of retirees experience at least one financial shock, and for one third of them, it depletes their savings by 25%, according to the Society of Actuaries’ (SOA) 2015 Risks and Processes of Retirement Survey. The types of shocks and unexpected expenses most often reported by retirees include:
I've tried lots of retirement income planners and one that I really like is the Fidelity Investments Retirement Income Planner. This is not a planner for someone who just wants a rough idea of how much money they need to save. This planner is for someone who is serious about figuring out what they'll need and where they stand (although you can bypass the detailed worksheets and get the rough estimate if you prefer).
This interesting study looks at the impact of family obligations on retirement. The report discusses what it means if you are the "Family Bank". Many retirees will provide financial assistance to parents, children, or grandchildren to pay for their housing, cars, education or healthcare needs, and this is an expense many retirees have failed to factor into their planning. "Gray divorce" impacts retirement as well, after a divorce, household income drops by more than 40% for women and by about 25% for men, and their may be obligations to help step children and grand children.
As longevity increases Canadians should find ways to save more and plan better to finance their retirement, two retirement experts tell BNN.
However, many Canadians are forced to continue to work well into their retirement years to meet their financial needs.
Planning for retirement is usually over-simplified and full of bad assumptions, like this one: "Assume you will need 70%-80% of what you earned pre-retirement." Well you won't be sending your children through college and maybe you will have your mortgage paid off. And you won't have commuting costs, or still be trying to save for retirement. But on the other hand you will have much higher medical expenses, you may be sending your grandchildren through college, you may be providing financial assistance to your children or your parents.
Economist James Poterba of MIT put it all together with colleagues at Dartmouth and Harvard's Kennedy School and estimated that about 46% of Americans die with less than $10,000 in assets, many of them lacking even home equity and relying almost entirely on Social Security. The results can be measured in more than merely dollars and cents. Poterba's paper found that this group is "disproportionately in poor health," in part because they have no resources to cover medical expenses outside Medicare.