Many people preparing for retirement feel like a kid on a road trip. “Are we there yet?” It’s the common feeling of anyone aiming for a destination. Unfortunately, for many future retirees it can feel like they are that cartoon character chasing after the sandwich hanging from the stick at their back. They keep running after it but they never get any closer. Well a new study by The Center for Retirement Research at Boston College brings both good and bad news for those perpetual chasers. The good news: you don’t have to work forever. The bad news: the benchmark age at which the majority of Americans will be prepared to retire at has been bumped back to 70.
It’s no secret that the longer that you work, the more financially secure you will find yourself in retirement. The age of reaching that financial security varies with the individual based on their circumstances, but the new study shows that 85% of Americans will be financially prepared to retire by age 70. Overall, the study found that American households fall into a variety of groups in terms of their age when they will be ready to retire.
· 23% will be ready between the ages of 66 and 68
· 17% will be ready between 69-71
· 9% will have to work until at least age 72
These numbers are determined by what are known as the National Retirement Risk Index measures. These portray the percentage of households that find themselves at risk of being unable to keep up their current standard of living throughout their retirement.
Age 70 provides an attainable goal for many Americans who have envisioned working well into their golden years in order to reach their financial goals. But if you have set your sights on lounging on the beaches of Boca well before that landmark age, there is hope for you yet. The study revealed that about half of Americans will be financially secure enough to enter retirement by 65. Many of you are sitting thinking, “How do I get to be part of that group?” Well, there are a few things that you can do to finagle your way into the “Sixty-Five Club.”
- Cost Efficiency—It’s important to remember that the National Retirement Risk Index measures are based on maintaining your current lifestyle. A good way to drop your target retirement age is to drop some of your expenses as you enter retirement. Downsize to a smaller house, save on gas by driving less, buy fewer clothes… you know the drill. This can be hard for many people who find that their retirement brings more free time, which brings more activities and adventures, which costs more money. If you commit to being more cost efficient in your retirement, you can be more age efficient in your retirement plans.
- Increase Your Savings—This doesn’t have to be a huge, life altering increase, but small increments can make a huge difference over time. Try to increase your savings by just one or two percent each year. You won’t notice the change now, but you certainly will notice it later. Ramping up your retirement contributions a little each year could have you living the good life sooner than you think!
- Become a Part-Timer—This can be a good plan both financially and socially. Many retirees find it a shock to their system to go from working full time for their entire adult life, to suddenly having nothing but time. Picking up a stress-free part time job can help you work your way into retirement while keeping you busy and engaged. Your new job can simply be reduced hours at your current employer, or a completely new and fresh engagement somewhere else. This part time work can also be a huge boost to your finances, as you continue to bring in a bit of income for the first few years of your retirement.
The bottom line is that changing times have brought about changing circumstances for retirees. With longer life expectancies and healthier adult years, it can be expected that longer careers will follow suit. Just remember that the end is in sight, and your hard work and diligence will pay off. Soon when you ask “Are we there yet?” the answer will be a resounding and confident, “Yes!”
National Retirement Risk Index: How Much Longer Do We Need to Work?