old man on the bench

The retirement process is misleadingly simple, you only need to plug a few numbers into your favorite retirement calculator within seconds, so you can a precise number that shows off how much money you need before your retirement.

1. Increased life expectancies – back in the day, the average life expectancy of Americans was 68. These days, it has increased to 79 years. In other words, everyone’s living a decade longer than what most of our parents did, and those years happen during retirement.

Certainly, for the most part, this is a good thing. However, it doesn’t really mean that you have to finance another ten years of retirement at a time when you’re still spending money but doesn’t earn a paycheck anymore.

2. Social security is not going to pay you that much – the 1983 President, Ronald Reagan as well as the Congress made a deal for overhauling the Social Security System. For the very first time, benefits were simply subjected to the federal income tax. Some of the states have their accompanying taxes on these benefits. Moreover, the age of retirement was increased for the future beneficiaries. So, the full age of retirement for many people who were born in the year 1943 as well as 1954 is 65.

For those who were born after the year 1954, the age of retirement increases gradually until it reaches the age of 67 of those people who were born after 1959. As the result of these changes, some of the present benefits are taken back in taxes and the lifetime benefits are being curtailed, due to receiving them a few years later.

3. A changed system in pension – in the past years, a number of private corporations shifted from the defined benefit plans to distinct contribution plans. This only means that companies are willing to chip into your retirement fund through plans or similar types of retirement accounts.

4. Increase in health care costs – over the past years, health care costs have simply increased about two to three times the rate of inflation. Up until today, since inflation is getting closer to zero, medical expenses increase at the rate of 2 to 4%. The medical care cost has been going up and the deductibles have also grown, for which the insurance cost has increased and the out-of-pocket health costs for retirees have been increasing, resulting in a need of more money before retiring.

5. Lower interest rates – for the past half-dozen years, the Federal Reserve kept interest rates a lot lower, which helps the economy by simply encouraging people to purchase houses and cars. However, this time, it already comes at a cost to people who have saved up a good amount of money for their retirement. The interest that you get from a bond of 10 years is less than 2%. Thus, no matter how hard you invest it, you still need more money to generate a good stream of profit and income.

It’s time to save more money for your retirement. You don’t want to be homeless when you retire, right?

/wp-content/uploads/2015/05/sit-400.jpg/wp-content/uploads/2015/05/sit-400-185x133.jpgMartin B.Saving
The retirement process is misleadingly simple, you only need to plug a few numbers into your favorite retirement calculator within seconds, so you can a precise number that shows off how much money you need before your retirement. 1. Increased life expectancies – back in the day, the average life...