10 Ways Boomers Can Avoid Savings Shortfalls in Retirement
Sounds obvious, but most people dont even estimate how much money theyll need for retirement, and if they do, they vastly underestimate how much they will need.
People plan for the average life expectancy, not realizing theres a 50/50 chance they will live longer; and a decent chance they will live much longer.
Workers misunderstand what their primary sources of income will be in retirement. Social Security is the most important source of income for many people, but before retirement, they tend to vastly underestimate its importance.
Due to the growth of retirement savings plans such as 401(k) and 403(b) plans, workers are now responsible for managing their investments. Most workers need to increase their financial knowledge and become experts about their workplace retirement plans.
A significant portion of retirees and pre-retirees do not seek the help of a qualified professional. While they indicate a strong desire to work with a professional, most ask friends and family for advice.
Plan early, WISER urges Boomers. Many workers will retire before they expect to, and before they are ready. Nearly four in 10 people retire due to poor health, caring for a family member, or job loss.
Inflation is a fact of life that workers usually deal with through pay increases. After retirement, it is up to people to manage their own assets, or secure guaranteed income. Few people have the skills to manage income to keep up with inflation.
Many people underestimate their chances of needing long-term care. Relatively few people either own long-term care insurance or can afford to self-insure a long-term care situation.
Many married couples fail to plan for the eventual death of one spouse before the other and the resulting drop in income at the time of widowhood. Many more single women live in poverty in old age.
People often pass up opportunities to get a lifetime pension or annuity, failing to recognize the difficulty of making money last for a lifetime. People say guaranteed income is important, but in practice they usually choose a lump sum.
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