Retirement is that enticing carrot many adults chase throughout their working careers. We look forward to days when we can pursue volunteerism, leisure activities and passion projects. However, confidence is shaky at best in what retirement will really look like. We aim for a retirement of dignity and independence where we can afford medical care, food and transportation—basic needs.
The current state of retirement poses concerns.
By 2020, 20% of the US population will be comprised by people who are at least 65 years old, according to Center for Retirement Research at Boston College (CRR). Also, the life expectancy is now older at 78 due to many factors like advances in healthcare. Additionally, according to CPA Wealth Enterprise, if both husband and wife live until age 65, there is a 50/50 chance that one of them will reach age 92. The extended life expectancy requires a stable future income.
Rise in healthcare costs are a real concern to the aging population. Out of pocket expenses are estimated to be between $250,000 and $400,000 for the average retired couple. Social security dependency poses another concern for retirement plans in America.
So with a growing population of those 65 years or older, increased life expectancy, rising healthcare costs and social security threats, the question persists how to plan for retirement with a dignified standard of living.
There is good news.
Deferring retirement until the age of 70 is one simple solution. The extra five years in the workplace allows an opportunity to amass enough assets and wealth to generate a more comfortable retirement income.
One factor that greatly improves asset management when pushing retirement to age 70 is the compounded 8 percent increase each year between ages 65 and 70—a benefit from the US government. Those five additional years postponing retirement pays big. The key for securing a dignified retirement is working a few additional years.
By working to the age of 70, many can significantly improve their quality of living in retirement, according to Center for Retirement Research at Boston College (CRR), which states that 85% of Americans will be financially ready for retirement by delaying retirement until the age of 70. This is contrast to 30% being prepared at the age of 62. Those five years make a huge difference in the way of retiring more independently and with more dignity.
How prepared for retirement are you?
Kehlenbrink, Lawerence & Pauckner CPA offers asset management services and stands ready to help you achieve the retirement you deserve. What do you think about postponing retirement until the age of 70? Please leave your feedback in the comments.