Whether you are 25 or 55 it may seem as though retirement looms just around the next corner – at least if you listen to everyone tell you how important it is to start retirement planning. This is one of those times when you really should listen to your well-meaning friends and family member though because entering your “Golden Years” without a plan in place can be downright dangerous financially. Gone are the days when an individual can count entirely – or even predominantly – on government sponsored programs such as Social Security and Medicare to fund retirement. Likewise, most employer sponsored pensions started disappearing decades ago. In essence, if you don’t plan for your own retirement, don’t expect someone else to do it for you. Just to give you an idea why retirement planning should be included in your comprehensive estate plan, consider the following retirement facts and figures:
How Long Will You Live?
- According to the U.S. Census Bureau, the senior population (65 and up) is expected to nearly double to 83.7 million people by 2050, up from 43.1 million in 2012.
- The U.S. Census also anticipates that the oldest old population (85 years and up) will more than triple in size between 2012 and 2050.
- Data from the Centers for Disease Control and Prevention has shown that life expectancies have risen by nine years between the mid-1960s and mid-2010s to nearly 79 years.
- A 60-year old retired man can expect to live an average of 21 years, while a 60-year old retired woman can expect to live an average of 24 additional years — meaning a big retirement number is a must.
How Expensive Is Healthcare?
- The Centers for Medicare and Medicaid Services is estimating that out-of-pocket health costs per capita will rise from around $1,000 in 2014 to more than $1,300 per person by 2021.
- Prescription drug prices grew by 104% for seniors between 2006 and 2013 according to an AARP’s Rx Price Watch Report.
How Much Have You Saved?
- Based on GoBankingRates’ recent survey, a third of American households have $0 saved for retirement.
- April data from the St. Louis Federal Reserve shows that the U.S. personal savings rate is only 5.4%, trailing that of many developed nations.
- Nearly a third of homeowners aged 65 and up had a mortgage in 2011, which is up from 22% in 2001, according to the Consumer Financial Protection Bureau.
- The Consumer Price Index for the Elderly, or CPI-E, shows that as of Dec. 2011, housing expenses equated to 44.5% of total costs for seniors.
- Pentegra Retirement Services’ 2015 study observed that 56% of Americans don’t have withdrawal plans in place to access their money in retirement.
What about Social Security?
- More than 60.4 million people were receiving Social Security benefits as of April 2016, 40.5 million of whom were retired workers.
- More than 10,000 baby boomers are qualifying for Social Security each and every day.
- The Social Security Administration suggests that benefits are only designed to replace 40% of your working wages.
- According to the Social Security Board of Trustees, the Old-Age, Survivors and Disability Insurance (OASDI) Trust is slated to burn through its excess cash reserves by 2034. This could lead to as much as a 21% cut in benefits.
Can You Count on Medicare?
- There are about 48 million current Medicare beneficiaries (five of six are senior citizens), and by 2030 there will be an estimated 79 million.
- According to the Kaiser Family Foundation, 93% of physicians and hospitals accept Medicare.
- There are no out-of-pocket annual limits when it comes to Medicare, so a supplemental plan may come in handy.
- Medicare typically covers about 20% of your eligible medical expenses.
- The Medicare Board of Trustees predicts that the Hospital Insurance Trust will exhaust its cash reserves by 2030.
If you have additional questions about retirement planning, or you wish to get started adding a retirement planning component to your comprehensive estate plan in the State of North Dakota contact the experienced estate planning attorneys at German Law Group by calling 701-738-0060 to schedule an appointment.
- Can I Do Anything to Prevent My Children from Fighting Over My Estate? - January 7, 2021
- 4 Things to Consider When Creating Your Estate Plan - September 29, 2020
- Estate Planning for Parents of Young Children - May 14, 2020