Risks Associated with Retirement

If you’re one of the “Baby Boomers,” you’re probably giving serious thought to retirement – if you haven’t already stopped working.  Even if you have already left work, you’re probably evaluating if you’re going to be able to continue to be retired.

Present economic crisis complicates the retirement question considerably by compounding some significant retirement related risks:

1. Average Life Expectancy Is Longer

Current life expectancies are longer than their parents’ generation. For example, in 1970, a 60-year old Caucasian male had a life expectancy of only 16.2 years; but, by 2008, his life expectancy had grown to twenty years.

So how is the retiree going to afford retirement during those bonus 3.8 years? There are only a few possible answers to that question:

> Accelerate pre-retirement nest egg building

> Work longer

> Move in with family members

> Expect a reduced standard of living

2. Escalating Health Care Costs

Adequately funding one’s medical care coverage are some of the most difficult financial activities, largely because requirements are so individualistic, with needs differing substantially from one person to another. Long-term care requirements are even more difficult to predict and arrange adequate funding.

Health care costs have grown at a rate greater than 5% (inflation adjusted) for the past 15 years – and that is greater than the increase in family income. Medicare costs are expected to rise at a comparable rate.

3. Legislative Changes May Impact Retirement Benefits & Benefit Programs

It has been widely reported that the expenses associated with the major social programs (e.g., Social Security, Medicare, and Medicaid) are growing faster than other parts of the economy, and some economists challenge the long-term feasibility of these programs because of the cumulative effects of increased longevity, size of the Boomer population, and increasing health care costs in general.

Moreover, current questions regarding continued health insurance during retirement, and at what financial levels, are rampant in today’s depressed economy – and these questions are given even more fuel by the reorganizations occurring, especially among the auto industry.

We are still witnessing a lot of conversation concerning a national health care program – but such discussions have been ongoing for decades, with few results to show for those efforts. Although President Obama will be leading a national health initiative this year, many people expect Congress to present a lot of opposition.

Many think that seniors past age 55 will be exempted from cuts in these social programs, but maintaining complete coverage for them is a two-edged sword – doing so increases the likelihood of a new tax, which would ultimately add to retirement tax burdens.

4. Retirement Dates Are Frequently not Totally Up to the Individual

According to a 2004 Health and Retirement Survey (HRS), 37% of seniors are forced to retire. This can occur due to feeble health or downsizings, etc.

5. 401Ks Became 201Ks

Did your retirement savings (including your 401k) take a major hit with the stock market meltdown in 2008? My investments were deeply affected. Many comedians now refer to 401Ks as 201Ks because of the drop in the stock market. For many people, their 401k was the bulk of their retirement savings, so this stock market crash substantially damaged their retirement plans.

Humpty Dumpty Was No Financial Planner

Some of the news is good news. You can fix a broken “nest egg”.

You can work longer, semi-retire and take a part-time job, work from home, start your own business, etc.

If you’d like to start an online business, but are hesitant because you’re not an internet expert, one excellent place to start for gathering all the knowledge about internet marketing that you will need to be successful is to sign up for the Online Success for Beginners classes.

A study by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can augment annual retirement income by 9%, while working a total of five (5) extra years results in an extra 56% annual retirement income.

If you’d like to learn how to create a second income, so that you can have a comfortable, financially secure retirement, check out Darren Salkeld’s new MaxPro Marketing System and get his FREE Report and FREE Audio describing the age-old secrets of creating wealth.

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