How do you picture your retirement? Do you envision visiting old friends and traveling to new places? Do you plan to take up a new hobby or pursue an old interest? If you have high hopes for your retirement, you aren’t alone. The retirement script is being rewritten by today’s generation who don’t plan to spend their retirement days quietly.
People today tend to be healthier and more active. They may also live longer than their parents’ or grandparents’ generation. The average life expectancy for a baby born in the U.S. at the turn of the previous century was 47.3 years.
1 Fifty years later, the life expectancy for newborns was 68.2 years. According to projections, babies born in 2010 can look forward to an average life expectancy of 78.3 years.
2 That’s an increase of over 65% in a little more than 100 years.
Whatever your plans for retirement, the fact is that a longer retirement with greater opportunities will require more money — probably more than you think.
Where will your retirement income come from?
Traditionally, retirement has been funded by what is known as a “three-legged stool” — Social Security benefits, pensions and personal savings. However, the average Social Security benefit provides only 37% of retirement income for retirees aged 65 and older, according to the Social Security Administration.
3 What’s more, only 31% of workers had access to a pension plan in 2009.
4 If you don’t have a pension plan, it may be tough to cover all the expenses you are likely to face in retirement. While some of your expenses may decrease in retirement (your mortgage may be paid off and your children may be on their own), other expenses will probably increase — health care and travel expenses, for example. And don’t forget the potential for inflation and its impact on the cost of food, utilities and other essential goods and services.
Getting from here to there
The bottom line is that you have to take responsibility for your own future financial security. One way to do that is by joining your employer’s retirement savings plan (if offered) and making regular, uninterrupted contributions to the plan. Also consider using individual retirement accounts, annuities and taxable accounts to help lay the foundation for a secure future.
Talk to your financial professional about what you can do now to prepare for the retirement you want and deserve.
1 Centers for Disease Control and Prevention, National Vital Statistics Reports, www.cdc.gov
2 The 2010 Statistical Abstract, U.S. Census Bureau, www.census.gov
3 Fast Facts & Figures About Social Security, 2010, Social Security Administration, August 2010, www.ssa.gov
4 National Compensation Survey: Employee Benefits in the United States, March 2009, September 2009, Bulletin 2731, Bureau of Labor Statistics, www.bls.gov
FINRA Reference #FR2011-0315-0296/E 05/31/11
Christopher A. Perme is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, Inc. Member SIPC. Supervisory Office: 1660 W. 2nd Street # 850, Cleveland, OH 44113. 216-621-5680.