Many Americans look forward to their retirement years; however, if you’re not prepared, it can also be financially stressful. When it comes to retirement, most Baby Boomers are unsure if they’ve saved enough and are concerned about running out of money. In fact, only 1 in 3 Americans are confident or extremely confident they’ll have sufficient income for retirement.1 Planning for the future can help ensure that you have enough savings to retire on.
So how much money will you need? It’ll depend on your living expenses and retirement goals, which is why retirement planning is so important.
Cost of Living in Retirement
Determining what living expenses you’ll need down the road can be challenging. After all with inflation, it’s hard to know how much things like food and transportation will cost several years from now. According to the American Retirement Survey from Forrester, one of the world’s leading research and advisory firms, 71% of Americans are concerned or extremely concerned about the impact of inflation on their retirement, and 88% of high-income earners consider it important or extremely important to have dependable income that can keep pace with inflation.1
In addition to inflation, 78% of pre-retirees (aged 55 – 59) are concerned or extremely concerned about healthcare costs in retirement — and 64% of those over the age of 65 are concerned or extremely concerned.1 According to HealthView Services, a provider of cost-projection software, the average healthy 65-year-old couple will spend around $377,000 on healthcare expenses in retirement.2 Depending on your age and health, your specific costs might exceed this figure or fall below it, but you should still prepare for medical care and possibly even long-term care costs in the future.
More than 4 in 5 Americans surveyed consider lifetime income important or extremely important, and 56% of Americans with a dependable source of retirement income are still concerned or extremely concerned they’ll outlive their savings.1
Unless you’re among the small percentage of workers with a pension, the burden of funding your retirement will mostly fall on your shoulders. That said, your savings and income sources will be extremely important when factoring them into your retirement plans.
Then there’s Social Security to think about. Most people can’t survive on Social Security alone, since the average benefit will only suffice in replacing about 40% of the typical worker’s pre-retirement income.3 And 85% of Americans feel it’s important or extremely important to have another source of dependable income besides Social Security.1 So be sure to factor in those Social Security payments into your retirement plans, as long as you recognize that you’ll most likely need other income sources as well.
While most Americans recognize the importance of securing a source of reliable lifetime retirement income to supplement Social Security, many are in the dark when it comes to identifying the right financial products to provide it. Be sure to contact your financial professional to discuss what retirement products will best suit your individual needs and retirement goals. With a little planning, your agent can help you estimate your retirement needs and give you a more thorough cash-flow analysis.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial professional.
12018 Retirement Perspectives Survey, Key Findings, Annexus & Forrester Consulting
22017 Retirement Health Care Costs Data Report©, HealthView Services
32017 Understanding the Benefits, Social Security Administration
Adult Financial Education Services (AFES)