Are you a Baby Boomer looking ahead to retirement? Are you currently retired and looking to keep more of your hard-earned savings?
Our team of financial advisors and wealth managers at The Hidden Wealth Solution recently reviewed the 2019 Retirement Confidence Survey (RCS) conducted by the Employee Benefit Research Institute (ERBI). In this survey 2,000 Americans (1,000 workers and 1,000 retirees) were studied to understand the psychology of the American worker and retiree when it comes to their retirement savings and readiness. The information that follows are key findings of the survey:
1) 1. 6 in 10 workers feel at least somewhat stressed about retirement planning
Are you worried about if you are saving enough money for retirement, making the right investments, or using the best type of retirement accounts? Don’t worry you are not alone. Most Americans are stressed about retirement planning. However, you do not need to be stressed as there is an abundance of resources to help you plan for retirement. Keep in mind the job of a financial advisor is to take the burden of retirement planning off you and reduce your stress. It is their job to create a retirement plan you can have confidence in so you have a great retirement. I have personally sat across from hundreds of Retirees and soon to be retirees and know the real retirement reality risks that are causing the main concerns for Boomer’s.
Check out this article to learn the top 10 tips for retirement planning!
2) 4 in 10 workers have tried to calculate how much money they will need to live comfortably in retirement
It is essential to create a retirement budget to understand how much money you will need in retirement to live a comfortable lifestyle. A helpful tool to plan for retirement is not an online retirement calculator. According to Forbes writer, Rob Berger, in his article “5 Excellent Retirement Calculators” the free online calculators typically are not a true reality of all that is needed to learn the actual numbers needed to support a lifetime retirement income plan. Most online calculators assume a retiree will spend less in retirement, use low inflation assumptions and never address much higher health insurance costs needed in a real retirement realty calculation. The key is completing a lifetime retirement income and expense analysis with factoring in inflation, taxation, pension reductions and death.
3) 3 in 4 workers and 2 in 3 retirees say income stability is a higher financial priority than maintaining wealth in retirement.
If you are unfamiliar with annuities you may want to research that type of fixed income vehicle. An annuity can be a good option to choose since most Americans highly value income stability. A retirement annuity is a financial product sold by insurance companies that guarantees the purchaser with income for life or a fixed period of time. Also, one advantage is that you can customize an annuity to protect against inflation. Money that is invested in an annuity grows tax-deferred. When you make withdrawals, the amount you contributed is not taxed, but the earnings are taxed as regular income. Since an annuity is guaranteed income and therefore less risky, they generally yield lower returns and sometimes have high fees. Annuities can be a safe step if one is looking for a stable return. Keep in mind that annuities have limited growth, some types carry high fees and they all expose retirees to tax risk volatility. There are annuity alternatives that have lower fees, higher growth and if designed correctly can avoid taxes. Give our financial advisors a call at 407-478-1599 for more information.
4)1 in 4 retirees consider their debt to be a problem
Debt is the silent killer and it is critical to eliminate your debt as soon as possible. According to Northwestern Mutual’s 2018 Planning and Progress Study, “The average American now has about $38,000 in debt, excluding home mortgages.” The main 5 debts you need to tackle before retirement are mortgage, credit cards, student loans, auto loans, and medical. We teach there is a 6th called Tax Debt and it can be and should be eliminated. Beyond retirees considering debt to be a problem, 7 in 10 workers say their debt has negatively impacted their ability to save for emergencies, save for retirement, pay bills, and participate in their employer’s savings plan or other employee benefits. Don’t let debt ruin your retirement- focus on eliminating debt now! Hear more about a proven strategy that enables one to turn debt into wealth by joining our Tuesday webinar, register online at: https://retirementprotected.com/
5) 7 in 10 workers would find workplace education or advice on how to manage competing financial priorities to be at least somewhat helpful
With only 23% of workers very confident they will have enough money for retirement, education about how to best plan for retirement is critical for workers. Even if your work place will not offer education about retirement planning, seek information from other outside sources. Look for helpful webinars, credible online sources like Forbes or Wall Street Journal, and advice from a financial advisor.
6) Nearly 9 in 10 retirees rely on Social Security as a source of income in retirement
With so many Americans relying heavily on Social Security for income, it is essential you claim social security benefits at the most optimal time. According to CBS News, “While there is no one optimal age, the researchers found that 92% of retirees would be better off waiting to claim Social Security until at least their 65th birthday.” Americans can claim Social Security starting at the age of 62, but the benefits grow about 8% each year until the age of 70. If possible, wait as late as possible to claim Social Security to optimize your benefits. Plus, since 50% to 85% of Social Security income is subject to tax it is key to coordinate tax planning with Social Security income planning.
7) 7 in 10 retirees rely on personal savings or investments as sources of income in retirement
Since most Americans rely on their own personal savings or investments for income, it is important to be strategic about the retirement savings account you use to best save on taxes and ultimately have more retirement money that can be protected from stock market losses. Learn strategic investments and retirement income vehicles to make that will allow you to save on taxes.
Check out this article to learn how to best save on taxes!
8) 8 in 10 workers expect to work in retirement and 3 in 10 retirees have actually worked for pay in retirement
Most Americans consider in their retirement budget an extra cash flow from a retirement job; however, most do not have a job. When you plan for extra income in your budget, but do not have it when retirement comes around it can make a huge difference in your spending. It is important to be realistic in your budget when you think about whether you will work in retirement.
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