Did you know, according to CNBC, more Americans are expected to turn 65 through 2027 than at any other time in history? This rapid population increase of older adults is often called the “Silver or Gray Tsunami,” though many new retirees are experiencing what could be viewed as more a tsunami of worry than anything they could have expected. According to real estate company Clever, in a survey of 1,000 newly coined retirees, the consensus among them was that the country was in the midst of a “retirement crisis.”
That is an ominous forecast for other baby boomers waiting in line to hand in their hats and badges for a golf club membership and weekday brunch menu. It begs the question, where does the problem lie?
The simple answer is that times have changed, the world has evolved, and comfortable retirement is defined by whether or not you can afford it.
In today’s environment, it is estimated that maintaining a comfortable retirement will require over a $1 million. For most Americans, that number is not even in their galaxy.
Preparing for retirement when you first started working might be different than what you may want to consider today. So much has changed over the years. However, the one thing that remains unchanged is the need to prepare years in advance with the help of a financial professional.
Here are six ideas to consider when preparing for retirement in the modern age:
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Diversify! Diversify! Diversify!
While there is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio, a diversified portfolio is essential to help mitigate the possibility of risk from market volatility so you can work on growing your wealth throughout your retirement years. Diversification within your portfolio is more than having different stocks spread across various industries. It also contributes funds to various financial instruments, including stocks and bonds, index and mutual funds, treasury bills, certificates of deposit, and other types of investment strategies, even real estate.
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Don’t drown in dollars you don’t have. Pay down your debts.
Paying down as much of your debt as possible before your retirement years can’t be stressed enough. Having more debt than savings has become normalized, but this is not normal. Fortune.com says the average retiree owes over $15,393 in non-mortgage debt. The further we move into the modern age, the easier access we have to things that make life easier and more enjoyable, and consequently, the more difficult it becomes to lower debt since you keep growing it or only paying the minimum.
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We are all invincible until we aren’t. Forecast your potential healthcare costs.
It is difficult to imagine yourself growing old and getting sick. However, being honest with yourself and recognizing the fact that approximately 70% of seniors will need some type of long-term care is a fact of life, according to SingleCare.com. That is an uncomfortably high number, and further stressing the importance of making preparations to help mitigate potential financial pressure should long-term services be required in the future.
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Eat rice and beans today and max out your accounts. Your arteries and your wallet with thank you tomorrow.
Retirees are living longer than ever before. One benefit that you should consider is the ability to maximize contributions to your accounts. You also have employer matches if you are still working, catch-up contributions if you are 50 or older, and other incentives that could help you work toward a more sustainable retirement.
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The Joneses went bankrupt, but you don’t have to. Downsize or relocate to save money.
With the seemingly steady increase in the cost of living year after year, in preparation for retirement in the modern era, you may consider downsizing to a smaller, lower-cost home or even relocating to a low-tax state to help you reduce your expenses to put away more money.
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Consult a financial professional.
The world is changing fast and with your busy life, you may not be able to keep up with everything. With the prospect of retiring at some point in the future, you want to take steps now to work to address some of the issues that you may have to confront down the road. There is no substitute for preparation. With retirement on the horizon, consider consulting your financial professional to create or modify your strategy and goals so the modern world doesn’t disrupt your retirement plans with any unfortunate surprises.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Diversification does not protect against market risk.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
Sources:
Retiring in America increasingly means working into old age, new book finds - CBS News
The Changing Face of Modern Retirement | Era Living
What does retirement look like in a modern world? - RBC Wealth Management
This article was prepared by LPL Marketing Solutions
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