Feb. 15, 2019
‘Retirement’ is defined, according to the Merriam Webster dictionary, as the withdrawal from one’s position or occupation or from active working life. Depending upon your age bracket, the word retirement conjures up different meanings and different emotions. And the age in which one will retire differs just as much as the images of what one will do once they are no longer in the workforce. Retirement viewed through the decades:
During your 30s:
Individuals in their 30s have watched their parents save and because they are now years into their own careers are doing a reasonable job of saving. According to the Transamerica Center for Retirement Studies, seventy-six percent are saving for retirement and thirty percent who participate in their 401(k) or similar type plan are contributing more than 10 percent of their annual pay.
During your 40s:
This age bracket of individuals begins to feel the pressure of the looming word ‘retirement.’ Fortysomething individuals are often referred to as the ‘sandwich generation’ – they may be responsible for the care of aging parents while working and juggling their own families and kids. This busy lifestyle leaves many feeling like their life is a constant hamster wheel. Only 10 percent are very confident that they will be able to retire with a comfortable lifestyle. Twenty-two percent state that paying off credit card debt is their greatest financial priority. Although this age cohort is often frazzled with what life is throwing at them, they are usually a focused group as eighty-two percent of those who are offered a 401(k) plan are participating.
During your 50s:
During your 50s many are well into their careers and beginning to realize they may live a lot longer. It is important at this stage of life to contribute as much as you can to your 401(k) and if possible, capitalize on the catch-up provisions which allow additional contributions to your employer-sponsored plans if you are over age 50. Now is the time to also pay down any debt you may have incurred over the years. Ideally, you want to enter your 60s debt free. For many families, by the time you reach your mid-50s, kids are leaving the house which may provide more disposable income. Close to 60 percent reported they plan to work past age 65 years old. This is most likely due to the fact that only 45 percent believe they are building a large enough retirement nest egg.
During your 60s:
People are living well into their 80s and 90s. This generation of adults are forced to think about the looming question – “What will retirement look like financially, socially, emotionally and physically?” Forty-seven percent of sixty-somethings expect Social Security to be their primary source of income when they retire. And a little over half of this age cohort (52 percent) plan to continue working after they retire with their top two reasons being income and health benefits.
Building a retirement income strategy is one of the most productive actions you can take to feel more confident with your financial future. The mindset you have and the strategies you engage regarding your current finances change as you move through each decade of your life. During your 30s, retirement may seem far off, however, it is the perfect time to begin making minor adjustments to your savings which can have a potentially major impact on your confidence level during your later decades.
*Statistics cited in the blog are based upon a Retirement Throughout the Ages: Expectations and Preparations of American Workers May 2015 survey from the Transamerica Center for Retirement Studies®.