Americans do not save enough money during the course of their working years to have the retirement life experience they have dreamed about. In a recent study by the Employment Benefit Research Institute, fifty-six percent of the workers interviewed stated that the total value of their household savings and investments, without including the equity in their residence, was less than $25,000. Twenty-nine percent of those interviewed had savings of less than $1,000. How are these people going to afford to retire?
Rethinking Retirement Issues
Many Americans look at retirement as a long term vacation. However, very few Americans can afford this long term vacation. Saving funds for retirement must be done over long periods of time to accumulate the type of capital necessary to stop working. The retirement age of sixty-five is unrealistic for the majority of Americans currently in the work force. Sixty-five is no longer the magic retirement number. Matthew Tuttle, a certified financial planner with Tuttle Wells Management, stated, “with life expediencies increasing, playing golf and going to early bird dinners every day can get [old] after 35 years. Rethink what retirement means. It could be working fewer hours or changing jobs to something that you like more.” Americans will either have to work longer, until 70 or 72, or, after retiring, might have to obtain a part time job to supplement their income.
Individuals who are over sixty-five years of age have more medical expenses as they grow older than when they were young and healthy. A Fidelity Investments study indicated that a sixty-five year old couple who retire in 2010 will need a quarter of a million dollars to pay medical expenses during the period of their retirement. This $250,000 does not include nursing home expenses. This study found that the average monthly expenditures for health care will amount to $535 a month.
Set Reasonable Priorities
Americans need to down grade their expectations of their standard of living in retirement. They need to save and accumulate larger amounts of assets to cover their longer life expectancies. They must think twice about purchasing very expensive luxury items instead of putting those funds away for future needs.
The Law Offices of Schlissel DeCorpo drafts wills. We handle estate administration and estate tax issues. We deal with issues concerning business succession. We also draft living wills and help our clients with end of life issues, supplemental needs trusts and special needs trusts. We prepare medicaid applications and handle medicaid issues for our clients. Feel free to call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.