Updated: March 28, 2020
Most people dream of retiring at the age of 60.
However, because of the lack of financial planning, many will find themselves needing to still work when that time comes.
In today’s guest post, Cristina Beltran gives us an interesting look at why people can’t or don’t retire at 60, and some practical tips on how you can prepare for your retirement.
Let’s now read what she has to say.
When you were younger, you always hear your parents, grandparents, and other adults talk about their plans for when they retire at the age of 50 or so.
In recent years, however, retirement age also seemed to be getting pushed farther back –55, 60, or 65, and even much older, like 80. It seems senior citizens are finding it harder to throw in the towel to enjoy their retirement years.
What could be the reason behind this? Why are they still coming in to work when they could just easily retire and enjoy their savings and lead the life they’ve always wanted?
According to financial planners, most sextagenarians do not consider retiring at their age because most of them are afraid to run out of money or do not exactly feel they have enough to sustain their life as a retiree.
A lot of those who did or have retired in their 60s found that they have underestimated their financial requirements for retiring, thus, finding themselves in financial trouble in their late years.
Indeed, to many, 80 is now the new 60. Most individuals in their late 50s or early 60s – otherwise known as the Baby Boomers – worry they won’t be able to retire comfortably with what they have so far managed to set aside.
There’s also increasing worry among this generation about the idea of being unemployed and not knowing what to do after leaving their respective jobs.
Older Adults Working Longer
A survey conducted by the Associated Press-NORC Centre for Public Affairs Research found that almost half of workers in their senior years are working longer than they originally planned – equivalent to around three more years than their estimated age of retirement.
The study also showed that older adults now make up a rapidly expanding percentage of the US labor force.
In a few years, it is predicted that employees aged 55 and above will make up 25% of the civilian labor force in the country – a remarkable jump from the 6.5% of employees 60 and older in 1985, according to a separate study by Brookings Institution.
UBS Wealth Management Americas did another survey where they found out that most affluent investors say that they do not feel old until they reach the age of 80. Meanwhile, adults in earlier generations define feeling “old” as something they feel at age 60.
It was also found that most of the people underestimate the amount they will need to finance their retirement. Individuals usually estimate the cost at 58% of their annual income, believing it can sustain them though out retirement. The actual percentage needed, as suggested by finance experts, is actually 75% to 80%.
Start Saving Up for Retirement Today
Retirement doesn’t need to be a letdown. It could be fulfilling, happy, and comfortable if you are able to plan adequately.
Start by calculating how much you will need for retirement by taking 80% to 85% of your pre-retirement income. That would be how much you would need post-retirement. Multiply the amount that you need by 25.
This will give you a more accurate figure on how much exactly you need to save to be able to retire comfortably.
Factor in any amount you will be getting from your Social Security, pension, and investment portfolio by the time you reach your desired retirement age. This will also enable you to see which areas you may need to focus on improving.
For a completely worry-free retirement, you would do well to settle all your debts. It is also advisable to try to find more ways to earn income by getting freelance jobs or starting a small business. These can certainly help boost your retirement savings fund.
If you have children, it is of course wise to invest in their college fund but don’t let your retirement plans take the back seat, as you have a shorter time ahead of you, as compared to them.
As everyone pushes for a late retirement, it should also raise our awareness in pushing for an early savings account for our retirement so that we can achieve our financial goals earlier.
Make sure you don’t underestimate your needed retirement income. A lot of retirees have made the mistake and are paying dearly for it. Remember why saving money is important right now. Do not postpone and always focus on what you want for the future.
Regardless of what age you plan to retire, the earlier you start saving, the better.
Author the Author:
Cristina Beltran is a writer, blogger and online marketing specialist at Compare Hero, Malaysia’s leading online comparison portal. Tina is also a freelance writer she worked as an information researcher before she pursued her writing career.