How to Survive the Retirement Crisis

Americans are shockingly unprepared for retirement, so much so that experts are now saying we are in a ‘retirement crisis.’ Learn more about the problems Americans are facing in retirement and how finding a qualified fiduciary financial advisor can help you navigate the retirement savings crisis.

Americans are shockingly unprepared for retirement, so much so that experts are now saying we are in a ‘retirement crisis.’ Learn more about the problems Americans are facing in retirement and how finding a qualified fiduciary financial advisor can help you navigate the retirement savings crisis.

Baby Boomer Retirement Crisis

Among those most unprepared for retirement are the baby boomers. Nearly half of this generation (47 percent), born between 1946 and 1964, are already in retirement. The Insured Retirement Institute, which represents the annuity industry, has released an annual report, Boomer Expectations for Retirement, which highlights the severe issues facing today’s boomers in retirement.

1. Retirees have not saved enough for retirement.

Many boomers are relying on Social Security, private pensions, and personal savings for retirement. However, 45 percent of boomers have no savings, only 38 percent of boomers can expect a pension, and the average Social Security check is $14,000 per year. Today’s boomers have simply not saved enough for their retirement and can not rely on pensions and Social Security to significantly contribute to their retirement.

2. Retirees too often underestimate health care costs.

Life expectancy is on the rise and today’s retirees can expect to spend an average of $285,000 on medical costs in retirement per couple, and that does not include long-term costs. 50 percent of seniors surveyed said they do not have long-term care insurance because they will use Medicare to pay for long-term care expenses. However, Medicare does not cover long-term care or custodial care. Only 8 percent of boomers have purchased a long-term care policy.

3. Retirees are underestimating how much they are spending in retirement.

Aside from not saving enough and having unexpected health care costs, retirees are spending more than they estimated they would in retirement. Americans between the ages of 65 and 74 spend an average of $55,000 per year but 60 percent of baby boomers said they needed less than that to live on. In fact, 44 percent of boomers surveyed estimated they would need less than $35,000 per year in retirement.

Creating Your Backup Plan

So, what happens when today’s retirees realize they are not prepared for retirement? 58 percent said they would downsize and live on Social Security alone, 37 percent said they would return to work, and 6 percent said they would ask their children for help.

Perhaps most telling, 63 percent of respondents who said they were not confident they did a good job preparing for retirement wished they would have saved more and 58 percent wished they would have started saving earlier.

Ultimately, avoiding a retirement crisis comes down to being prepared. Meeting with a financial advisor can help you develop a comprehensive plan that gets you financially and mentally prepared for retirement. A fiduciary financial advisor can help you develop a retirement plan that sets realistic goals and outlines a realistic retirement - no matter how much you currently have saved.

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