5 Reasons Why You’ll Probably Need More Retirement Income
Once you’ve been in the workforce long enough, you’ll know that cost-of-living increases are a fact of life. And chances are by the time you retire, the economy will bear little resemblance to what it’s like now. This is one of the primary reasons why some people need more retirement income than they realize.
Surprises are bound to happen. But if you plan for the unexpected, you’ll be more likely to weather all of those financial storms just fine. Here are 5 additional reasons why you probably need more retirement income:
#1: Chances Are You’ll Live Longer
One of the biggest reasons most people need more retirement income than they think is longer life expectancies. In the late 1800s and early 1900s, life expectancy improved, but not for the same reasons it has today.
Then, the National Institute on Aging says it was a matter of more children surviving childhood, which was quite an accomplishment. Now, it’s more about better health in old age. The longer you’ll live, the more retirement income you’ll need.
#2: Pensions Are Relatively Uncommon
Hardly anyone receives a gold watch and comfortable pension at retirement. That’s more the stuff of classic Hollywood movies, the same as pristine suburban sidewalks and moms vacuuming the living room wearing heels and pearls.
Pensions are anything but dependable. Even if your company has historically held a pension program, there’s no guarantee that it will always be there. More and more, they’re becoming a thing of the past. So while a pension might be a great bonus when the time comes, you shouldn’t depend on it.
#3: Social Security Can’t Cover Your Needs
Living on Social Security is not much different from living on a minimum wage job’s income. It’s possible, but definitely not fun. Social Security isn’t intended to be your sole source of retirement income. If you’re counting on it to sustain you, you could be in for a difficult time.
It’s much better to think of Social Security benefits as supplemental. You can factor it into your overall retirement plan, but even this government program isn’t guaranteed to still be active and functioning the same way when you retire.
#4: Health Care, Health Care, Health Care
Longer life expectancies bring more health care needs. And even with Medicare, you’ll have some regular out of pocket expenses. Adequate health care is critically important for people who are retired. It’s one of the main reasons why people live longer now. U.S. News & World Report says “The cost of medical care has gone up, deductibles have grown, the cost of insurance has increased and retiree out-of-pocket health costs have been rising, again resulting in a need for more wealth at retirement.”
Health care expenses should also include planning for long-term care. No one knows what the future holds. You could live a vibrantly active and healthy retirement life, or some unexpected health issue could emerge. With long-term care as part of your plan, you won’t have to worry about whether you’ll receive the care that you need.
#5: Kids Launch Later These Days
Time was, most kids couldn’t wait to escape Mom and Dad’s house and fly under their own power. Sure, many of them remained at least somewhat financially dependent, at least for a while, but it wasn’t a chronic issue the way that it is today. Now, there’s a reasonable chance that you’ll still help support your adult children long after high school and college.
The 2014 Pew Research study, “A Rising Share of Young Adults Live in Their Parents’ Home” explains that more than 1/3 of adult children age 31 and under still live at home. The study goes on to say, “A record total of 21.6 million Millennials lived in their parents’ home in 2012.” And after they do move out, many remain dependent on parents for financial help.
Create a Plan that Prepares You for the Unknown
Perhaps the main reason you need more retirement income is the unknown. You just can’t know what the economy will be like, how healthy you’ll be, what your regular expenses might total, or what interests you’ll want to pursue. There are lots of more focused reasons, but the fact that you can’t know until you get there is the biggest one. Like they say, it’s better to be safe than sorry.
NewRetirement helps people from all walks of life and different income levels plan for a financially fit retirement. And one the most effective tools is our retirement calculator. It takes into consideration factors such as the cost of living where your home sits, your preferred lifestyle, the types of investments that you hold and how they’re predicted to grow, and many other elements that you might not think to include.
Try our retirement calculator for free, and start on a path toward a well-funded retirement where surprises might come, but they won’t ruin all of your hard work.