One day, the daily grind will give way to commuting, meeting, and scheduling freedom in the form of retirement.
Beginning last year and continuing for the next 19 years, more than 10,000 Baby Boomers will reach the retirement age of 65. The elderly are living longer and heath care costs are rising. According to a 2012 report from the Center for Retirement Research, “at Social Security’s earliest retirement age of 62, only about 30 percent of households are prepared for retirement.” At age 66, that number jumps to a harrowingly mundane 55 percent.
Traditional pension plans are less common today; remaining plans have slowly been phased out over the past several decades. When push comes to shove, how much money will you need to retire without excessive worry?
CNN has a helpful calculator to outline a potential budget to retire, but several factors will determine how much you’ll truly need for the future. Some of these include:
As stated by Ronald Reagan, “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” Living on a fixed income isn’t easy knowing your dollar today may be worth 95 cents a year from now. If the inflation rate increases at 2.5%-3% each year and you need $35,000 every year to live today, in 10 years, it could add up to an extra estimated $10,000.
Future of Social Security
Social Security will soon start paying out more than it is receiving in contributions. What does that mean for the long term? The U.S. government has stated that benefits may be reduced after 2041, but will change come sooner? Only time will tell. We know retirement options can be confusing.
Contact Washington Federal today and we can help you plan for your financial needs.