Craig Erwin, Ph.D. 12-17-20
Most retirees live very modestly. Most would probably prefer not to. The 20th Annual Transamerica Retiree’s Survey found that the average retiree had an estimated median income of only $29,000 before taxes in 2019. And some retirees are even worse off; 27% of households reported household income under $25,000. 56% of households reported income under $50,000 before taxes, so it appears that relatively few retirees tend to be well off. Only 13% of households have income of at least $100,000 before taxes.
Just because most retirees report relatively low levels of income does not mean that all or most retirees fail to plan for retirement. As Catherine Collinson, President and CEO of the Transamerica Institute and Transamerica Center for Retirement Studies notes, some retirees were forced to retire early, reducing the number of years they work and extending their years in retirement.
A big challenge for retirees is paying off debt. Transamerica’s survey revealed that 46% of retiree households have nonmortgage debt and 23% have mortgage debt.
Why is this important? Most people are either unprepared or underprepared to retire. Some likely ignored the need to prepare. Others may have made unrealistic assumptions about expenses, health or employment. Others probably had a sound plan that got thrown out the window when they lost a job or were forced to retire prematurely.
How can you ensure that you are prepared to retire when the time comes? And how can you ensure that you retire comfortably instead of having to worry about money constantly and perhaps having to return to work?
It’s all about preparation. You must start saving for retirement as early as possible and as aggressively as possible. The most important factor affecting whether you are able to retire comfortably is how much you save. You should start saving for retirement in your teens, if possible, when you land your first part-time job. Open an Individual Retirement Account (IRA), put as much money in it as you can and invest the money in an index stock mutual fund such as an S&P 500 index fund. Then when you start your first full-time job after college, sign up for the employer-sponsored retirement savings plan. Have as much deducted from your paychecks as you can; it’s good to save until it hurts. You can always reduce the amount deducted if you find you have too little money left from your paycheck to pay bills. These steps will enable you to retire comfortably on your terms.
Click on this link for more information on preparing for retirement.https://womenretire.com/the-best-way-for-most-of-us-to-accumulate-wealth-dollar-cost-averaging/
Watch this video for information on alternative approaches to retirement and retirement savings.
Watch this video for ideas on how to cut retirement costs to the bone.Video details – YouTube Studiohttps://studio.youtube.com/video/e_sBtJHuZRQ/edit