A New Look at the American Dream
Whenever the conversation turns to financial goals and a secure future, certain ideas at the core of The American Dream pop up -- save for retirement and own your own home are two of those. However, times have changed economically.
Buying a House
The 2008 housing crisis put many Americans in a difficult position. The bubble undermined the old adage that you should buy a home as soon as possible and pay off the mortgage before you retire, so that you have a secure asset in the future. But remember that a house is a very long-term investment. You’ll be paying down the mortgage for 30 years.
Last year only 32% of home buyers were first timers. Millennials, who are in their early twenties and did not experience the housing crisis, are still keen to buy a home. If you are getting ready to retire, you might want to think about renting instead. Home ownership can be more expensive than you expect. Retirees might do better to secure income from investments than to sink the money into a new house.
After WWII, the idea of retirement with a pension really took hold, and by the 1970s this was the norm. The American way was to go to school, get a good job, work hard, and retire with a pension. In 1900, 65% of Americans over the age of 65 were still working. By 1965, that was down to 17%. Very few jobs today offer that option.
Today, 36% of Americans don’t contribute to any retirement or pension plan, and 24% say they have postponed their retirement at last once already. Almost 20% of Americans 65 and older are now working, according to the latest data from the U.S. Bureau of Labor Statistics. That’s the highest since the early 1960s, before the U.S. enacted Medicare.
Right now, 35% of Americans over the age of 65 rely on Social Security for their retirement income yet what was the backbone of so many American retirement plans for the last 50 years, is now not such a sure thing anymore. Six out of every 10 Americans believe that there will not be sufficient funds in Social Security when they reach retirement age.
That old American Dream is not what it once was. To be successful and then retire with sufficient funds to enjoy your golden years, you have to rethink your strategy. It’s up to you to craft your own American Dream – no one is going to do it for you. Work with an experienced investment advisor who can help you set and meet your financial goals.
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