Retirement trends

 Worrying is an evolutionary survival trait that is hardwired into our brains; most of us seek to control and prefer order over chaos. There is no way around it; our instinct is to equate uncertainty with potential danger. The financial markets are volatile, and thanks to multiple round-the-clock financial news networks, we are reminded of this fact daily. We see the economy swinging between expansion and contraction. We read and watch pundits go on about the unpredictability of markets, Fed rates, and the economy. Given all of these factors, how can you worry less and have a happy retirement? One of the answers is to do some. financial planning for retirement. By planning you can:

·     Define what is important to you (your objectives, needs, wants, & wishes).

·     Set your own goals.

·     Evaluate your current financial situation.

·     Develop a retirement savings strategy.

·     Determine the best investments to meet your needs.

·     Anticipate inflation and economic volatility.

·     Monitor your progress, adjusting along the way.

With all this uncertainty how does one differentiate old retirement trends from new retirement trends.

Let’s take a trip down memory lane. Previous generations of retirees counted on pensions to enable their retirement. In the United States, government employees started receiving pensions in the mid-1800s, and many corporations began offering pensions to their retiring employees by the early 1900s. When pensions weren’t the primary source of income for retirees, Social Security would replace their earnings. Between pensions and Social Security income, many retirees of previous generations had predictable retirement income streams that they could never outlive.

Access to a time machine would likely show us that future retirees will not have the same predictable income. First, there is a dramatic decline in corporate pensions. In 1979, 87% of employees at medium and large companies participated in pension plans. As of 2017, only 16% of Fortune 500 companies offered “defined benefit pension plans”. Second, responsibility for retirement income has shifted from the employer (who provided pension plans) to employees who are now responsible for funding and investing in their own 401(k) or 403(b) plans. Third, even Social Security cannot be counted on fully; The Old-Age and Survivors Insurance (OASI) Trust Fund is on track to be depleted by 2034, meaning retirees will receive only 77% of their benefits. In summary, the old retirement trend included income predictability, while the new retirement trend does not. Hence, our human instinct to worry may be triggered.

Sixty-five used to be the magic number for retirement. To begin with, half of the state pension systems used 65 as the retirement age. Additionally, the federal Railroad Retirement System and most corporate pensions followed suit.

Today there is no definitive retirement age to target. Anyone born after 1938 must wait anywhere from a few months to a few years after turning 65 before becoming eligible for full Social Security benefits. Why? Few pensions are left, meaning most retirees have no guaranteed retirement income stream at age 65. While the old retirement trend was to work until age 65, the new trend leaves those not yet retired feeling uncertain about when they should retire.

70 is the new 60. We are living longer and healthier lives than our grandparents. With age comes wisdom, and with wisdom come possibilities. This reality leads to several questions: Do I want to work longer or part-time? Will I outlive my money? How can I optimize my retirement experience?

Financial planning and investing are multifaceted and complex, with many factors to consider, such as taxes, insurance, benefits, and tens of thousands of investment options. By working with a professional Wealth Advisor, you can reduce the uncertainty of retirement and enjoy the happy retirement of which you have always dreamed.