MYTH: I'll keep working past 65. I may never retire!
REALITY: 58% of recent retirees stopped working unexpectedly, and the median age this happened is 63. This may happen due to reasons beyond their control: health problems, disability, downsizing, or having to care for a family member. Only 6% of retirees earn income from working.*
MYTH: Social Security Will Cover the Bulk of My Expenses
REALITY: Here's a sample scenario—your average income throughout your career was $65,000. Your social security benefit will be about $2,662 per month. Using the a common theory that you'll need to replace 80% of your income in retirement, you would need $4,333 monthly. You see the shortfall? Recent retirees are living it - only 30% strongly agree that they've saved enough for retirement.
MYTH: At least I'll have Medicare to help with my medical bills
REALITY: A recent estimate shows that a couple at age 65 may need $300,000 to cover medical costs in retirement. This includes Medicare deductibles, copays, supplemental plans, and expenses that Medicare doesn't cover, like hearings aids and glasses. What is not included? Long term care. That same couple at age 65 - they each have a 70% chance of needing some type of long term care in their lifetime. That could cost $79,800 per year in the state of New Jersey.**/***
Will you need to work longer than planned? Do you need to increase savings or adjust spending? What can you do now to work toward preserving your assets and your lifestyle in retirement?
Just as few weathercasters can accurately forecast a month's worth of temperatures and storms, many retirees find their futures unfolding differently than they assumed. Your assumptions may be tested as well.
If you have decided to retire, you may have already been saving and planning for the day you stop working. Here are some suggestions towards making the move from employee to retiree as smooth as possible.
This guide takes a critical look at the finances of retirement. It talks about health care costs, income stability, and the burden of debt and is designed to help your clients know the recipe for success in retirement.
*Transamerica Center for Retirement Studies, 2020
**Fidelity Retiree Cost of Care Estimate, 2021
***Genworth Cost of Care Survey, 2021
This is a hypothetical example and is not representative of any specific situation. Your results will vary.