Monday, March 25, 2013

Retirees Nervous about Size of Nest Egg

Retirement isn't what it used to be - if it ever was. Recently and soon-to-be retired Americans share a host of worrisome concerns and only 39% of them believe that they have or are building a sufficient nest egg to allow them to retire at all. (In fact, studies by Transamerica and others indicate that the real number is probably closer to 5%, but that is a story for another day.) More than half plan to work past the "traditional" retirement age of 65 in the hope of amassing more assets and slightly more than 50% say they will never be able to stop working entirely. As in not ever.

Future health-care costs are the most common worry, cited by 3-in-4 retirees. Not considering any expenses related to long-term care or nursing facilities, Fidelity Investments estimates that the average retired American faces medical costs of $240,000 with a 6% rate of annual inflation. When you consider that the average 64 year old American about to retire has total retirement savings of about $70,000 you can see why people are nervous.

The traditional advice to "save more" is valid of course, but much more so for the 25 year old than the 65 year old. Continuing to work "forever" is certainly an option. If a person has a job that they can still do. Perhaps its time for people to dust off those "network marketing pyramid schemes" and take another look. There is something to be said for a business that allows you to create a residual (i.e., ongoing) income that will last you the rest of your life.

Social Security or residual income? I know where my bet is going.

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