Overcoming a Retirement Shortfall
Workers in their late 50s or early 60s may have saved a lot of money for retirement, but when they take a closer look at their situation, they still fall short of a financially secure retirement. In fact, two-thirds of working households age 55-64 have retirement savings far below what they will need to maintain their standard of living in retirement.
According to a recent project by the Stanford Center on Longevity in collaboration with the Society of Actuaries, the answer is simple but powerful: Find a new work situation that addresses your specific work problems, pays you enough to cover your ongoing living expenses, and allows your current savings and Social Security benefits to continue growing.
The report shows that using retirement savings to enable delaying Social Security benefits increases projected retirement incomes by up to 6%.
The reason delaying the start of Social Security benefits increases your projected retirement income is that the increase factors Social Security uses to adjust your benefits (called “delayed retirement credits”) are generous to retirees. So many older workers will get a really good financial deal from Social Security if they can delay the start of benefits as long as possible.
One thing to consider here is lifespan. In generations past, life expectancy was a lot lower than today. Over the last 100 years, people have achieved impressive progress in health that has led to increases in life expectancy. In the United States, life expectancy was around 70 years old in 1970, as opposed to about 80 years old in 2011.
As a result, people are outliving their projected retirement savings in today’s generation. If you had been born 100 years earlier, you might have died even before your current age.
This thought should give you the enthusiasm and motivation you need to take on the challenges of balancing your work, financial resources, and retirement and make a good plan that works for you for the rest of your life.
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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com