Whenever I ask someone still working when they would like to retire, they often reply “today!” They know that there are certain factors keeping them from retiring. Primarily their small retirement savings. A successful retirement means careful planning for expenses that you might experience. Here are a few whoppers that could be keeping you from retiring…today:
1. A major stock market decline. There were a lot of impending retirements derailed from the most recent stock market decline in 2008. The Dow Jones Industrial Average plunged 48%, and with it the hopes of many would-be retirees. You live on the income your portfolio generates, along with pensions and social security, and when it drops this much, so does the standard of living. With a short time before retirement many could not make up the difference.
2. Divorce. According to the CDC, the divorce rate in the United States is staying steady at 50%. Divorce can cause sudden financial strain on both individuals. Instead of one living expense for housing, suddenly both have the expense and it is much higher. Divorce can mean that one spouse may have to return to the work force to make ends meet. In addition, retirement assets will be split and may not generate the needed income to maintain lifestyle.
3. Children moving back home. This is happening more and more. In particular with a recession that lasted longer and was deeper than any we’ve experienced since The Depression. It forced many young people back to live with their parents. This placed financial stress on the older parents, who may now have to postpone retirement until later.
4. Lifestyle and health changes. If you get diagnosed with a health condition that requires expensive medication or treatment, this can seriously put a dent in your retirement plans. You may need to continue working for the health insurance or your drug plan. If you become disabled you may need specialized equipment for your home too.
5. Poor planning. This is probably the one I see the most, and is the most common reason you may not be able to retire “today”. Proper financial planning can take into consideration a serious illness or market drop. Start looking for a good financial planner today. A planner can help you take these major roadblocks and develop a plan to stick to your goals.
I say it all the time, save your money and one day it will return the favor. A small adjustment in your savings now will make it easier to transition to retirement without sacrificing your lifestyle. Educate yourself, get a good advisor and save as much as you can as often as you can. If you would like help with your retirement planning write me at email@example.com, or call me at (859) 225-2596.