- Posted September 28, 2015 by
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Retiring Baby Boomers Place New Strains on Medicare and Social Security Programs
Most millennials who have been interviewed about retirement say that they don’t expect social security to be there for them when they retire. Millennials (Generation Y) are generally considered those born from the early 1980s to the early 2000s. If an individual was born in 1982 and retires at age 65, that person will be retiring in the year 2047. The problem with this is that the social security program may be due to begin running out of money in the year 2035.
Financial planner, Lee Martin from TRUE Retirement in Bellevue, Washington, a 5-star wealth manager for 2014 and 2015 by Seattle Magazine, stated in a recent interview that only about 40% of Americans ever give serious thought to their retirement plans. The one piece of advice he would offer to millennials and those nearing retirement is to begin sketching out some type of plan now. The more thorough people are with their retirement plans, the higher the chance they’ll actually be able to retire when and where they want to.
“In speaking with retirees,” Martin said, “our firm has asked them what they wish they had known before retirement. Some pretty eye-opening answers have been conveyed. Of course, most wish they’d saved more and spent less during their lifetime. Others felt that they didn’t take the topic of retirement seriously enough before it was too late to really do anything about it. Retirement should be fun. People shouldn’t have to worry about working right up to the end of their lives.”
Two distinct factors weigh in heavily on the future of retirement in America. 1) The majority of Americans aren’t nearly as prepared as they should be. 2) People are relying on social security and Medicare to be there when there’s every indication that these programs will not still be functioning as is 50 years from now.
In many instances, Americans refer to their 401k plans when asked about how they are saving for retirement. Recent studies have shown that the average American has about $70k in their 401k plan. This might be enough to support an individual for two years. The average life expectancy rises almost annually and is now at 85.5 years for women and 82.9 years for men. The Center for Disease Control [CDC] has stated that these averages will rise gradually over the next century due to the advent of better medical care, innovative drugs and a growing trend toward healthier lifestyle choices.
Another issue that financial planners are noticing is that workers move on from one job to the next and leave their 401k behind. Many aren’t sure exactly what they have in dollar amounts or how the plan is doing. Financial planners suggest consolidating these so that it’s easier to monitor their progress and make changes when necessary.
Lee adds, “The best piece of advice to give those nearing retirement is to sit down and lay out a strategy where they can save a little something on a regular basis. IRA’s are a good option because taxes can be deferred on up to $5,500 or more depending on age. There are a number of other sound strategies that are used to put together a program that will fit each individual’s lifestyle. Our firm encourages clients to take better control of their finances and investments.”