If there is one overriding image everyone would have about their retirement, it would be “peaceful.” The specifics will vary widely based upon individual preferences. The area in which some envision spending their senior years may be rural and pastoral. For others it would be a bit more urban, but it still inspires dreams of days without pressure.
None of us has created a mental picture of a future filled with uncertainties. We have had a career filled with those. Days of uncertainties erode life. They leave us drained and deprived of rest. Periods of insecurity, whether they spring from relationships, occupation, health, finances, or our emotions, play out in the mind like a raucous, discordant, grating, ill-conceived musical composition. No one dreams of a future filled with insecurities.
Regrettably, that is the future toward which some Americans are racing without control. Consider the implications of these statistics:
- According to an April 2021 study released by MedicareAdvantage.com, nearly 50% of U.S. retirees believe they retired too soon based upon their current quality of life. The same percentage of U.S. retirees said they left the workforce with less money than expected.
- According to a 2020 TD Ameritrade Road to Retirement survey, 53% of those 50-59 years old have less than $99,000 in retirement savings.
- Fidelity’s 2021 retiree healthcare estimate reported the average couple retiring at age 65 can expect to pay $300,000 out of pocket for healthcare costs over their lifetime. This is over and above the costs covered by Medicare, a supplement policy, or Medicare Advantage plan! This breaks down to $143,000 for men in retirement and $157,000 for women who typically live longer.
- The TD Ameritrade survey reported only 14% of those 60+ years old reported having sufficient retirement savings to cover the estimated out-of-pocket medical costs and have anything remaining.
- Social Security alone is designed to replace 35%-38% of working wages.
Statistics may be manipulated, but we endeavor to accurately present the challenge that lies ahead in the senior years. We all want to live in peaceful confidence, but insecurities threaten that peace.
Our posts never propose a “magic number” for anyone to have in their retirement account. Living confidently and peacefully is about understanding what you and your spouse (or you for those who are single) will need in retirement. Where you live will greatly affect what your cost of living will be. Your health will either allow you to work on your own terms, or it may require you to retire fully. What one family needs may be drastically different than another.
Everyone will need to assess the income they have from Social Security and/or their pension. What may they reasonably expect to derive from their savings? Then they must budget accordingly for housing, entertainment, their acts of generosity, and their living expenses.
Creating a plan to provide a peaceful retirement is not about shooting for some specific size of the financial nest egg. A peaceful future is built by living below your means today, so you will be able to live on your own terms in the future.