If you are debt free and have a nice nest egg built up, retirement can be a wonderful time of life. However, for many people retirement can be a scary thing because there are so many financial uncertainties. Will Social Security benefits survive? Will health expenses increase dramatically? Will inflation take off and unexpectedly eat up assets? In short, will you have enough money to survive retirement?
Twenty years ago, financial advisors set up retirement plans based on the assumption that their clients would live to be somewhere between the age of 80 to 82. However, that is no longer the case. With advancements in science and medicine, and a greater emphasis on healthier lifestyles, it is becoming more commonplace to see people living independently well into their late 80’s and even early 90’s. For that reason, sound financial planning requires an asset base that will sustain 25 to 30 years of retirement living.
The fear of outliving one’s money is not without basis. For most people, subsisting solely on Social Security benefits would mean a drastic reduction in lifestyle. There would be no extras—no vacations, no club memberships, no helping grandkids—just getting by on the bare necessities. I recently helped one couple in their 80’s that was in such a position. They had to borrow money from their children to pay for a $250 automotive repair. They hated to do it, but it was the only option they had.
That is why I frequently recommend that couples entering retirement continue to work as long as their health allows them to do so. That does not mean they have to continue working in the same profession, for the same number of hours, for ten more years. That might be an option for some people, but most people are burned out when they retire and they simply need a change of scenery and more free time. Consulting work and part-time teaching may be an option for some retirees. But even if it’s not, a part-time minimum wage job can go a long way in stretching out those retirement dollars.
Considering the consequences of out living your money, it might be a good idea to visit with a trained financial professional to get a retirement plan “check up.” This will help you see how prepared you are for retirement and whether it makes sense to keep working a little longer than you had originally planned. That is one of the services we provide at Cambridge Wealth Management. If you contact our office we would be happy to evaluate your current financial position at absolutely no cost.