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Unfortunately, every year it seems as though seniors are finding retirement harder than ever, but why? There are lots of reasons, but a few key ones always stand out. It’s scary to know what your future holds as you get closer to retirement or closer to an older family member retiring, but being aware of what’s going on in the market and the implications of policy changes, should help you make choices to help keep retirement in sight.
We’ve all seen inflation as a headline everywhere recently, so it’s no secret that it’s affecting everyone’s quality of life. Money is just covering less and less, which can be daunting when you are trying to save enough to retire. When your weekly grocery bill used to cost you two-thirds of what it does now, it’s easy to see why people are struggling to contribute enough to stay on track with their retirement savings. Inflation also is something you have to consider when knowing how much to save. For example, to preserve your lifestyle, you may have thought you’d only need to cover $50,000 a year, but at the rate of inflation, you may now realize that you actually need to cover $60,000 a year. That’s a huge difference needed in your retirement account when you think about how long your retirement may last.
Social Security Scariness
Another reason that people are retiring later than in the past is due to the insecurity around Social Security benefits. It’s no secret that there are concerns on if the Social Security system will eventually run out of money. This is due to not enough workers paying into Social Security, and too many beneficiaries receiving benefits as the Baby Boomer generation reaches retirement between 2010 and 2030. Additionally, Social Security relies on interest rates to increase the pool of money it has to pay out from. With the investments not returning as well lately, this means that the money paid into the system isn’t gaining as much momentum over time. Finally, social security policies are rapidly seeing proposed changes that could affect a person’s payment amount, starting age, and qualifications. This all means that relying on Social Security to fund your retirement is looking riskier and riskier.
The Stock Market Blow
Similar to inflation, the Stock Market has seen a downward trend in returns lately. Your 401K, IRAs, and other retirement vehicles have probably lost a decent amount of steam over the last few months, and experts are unfortunately calling for this to continue. If a full-blown recession is truly around the corner, then you can expect that your retirement vehicles will continue to see a decline as your investments lose value. Of course things should normalize and bounce back up, but this can take years, meaning if you were planning to retire anytime soon, the effects of a down market may cause you to have to wait.
Waiting to Retire
Because of all the issues we are seeing, many people are waiting longer to retire than they originally planned. For those that are able to hold onto good jobs, this can work out. For others that are facing physical or cognitive declines, they may find that they are being pushed out of their current positions, which puts them in a difficult situation. You don’t want to have to retire before you can truly afford it, but it can be emotionally difficult to postpone such a key milestone in your life.
Working After Retirement
Unfortunately, there are many people who didn’t save enough money to get through all of retirement. Maybe they miscalculated what was needed, or have lived longer than they expected, but when you run out of money and options, it typically forces people to go back to work in some capacity. Many people have to take on part-time jobs to afford their lifestyles, or some are taking on part-time jobs proactively to ensure their retirement funds stay high enough as they age.
It is no secret that retirement is harder than ever due to the reasons outlined here and many more. As you plan for your retirement, make sure to think through all that you may have to pay for. This should include things like specialty care and assisted living. It’s important to be financially prepared for anything that life may throw at you in your senior years.
Sandyside Senior Living
This information was provided by Sandyside Senior Living in White Lake, Michigan. Sandyside specializes in advanced care for seniors with dementia, Parkinson’s, and all age-related illness.
Interested in learning more about Sandyside Senior Living? Contact Sandyside online, or call at (248) 698-3700.
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