Workers looking forward to retirement have lots of decisions to make before they write a date on the calendar for the big retirement party. Anyone between the ages of 55 and 60 has probably thought about retirement at least once. The current average age for retirement is 61, according to Gallup Economy, although there are plenty of Americans who work later in life – either because they enjoy it or because they are not financially able to retire. This retirement age has gone up since 2010, when the average age was 59.
Financial advisors recommend people start as young as possible to plan for retirement, and anyone looking to retire in the next five years should take control of their financial future now. The average amount of money a 50-year-old American has saved for retirement is $43,797, and when you see the stats below, you might see a need for additional retirement planning. Here are some statistics about the current generation approaching retirement:
Social Security. In 2013, the Social Security maximum monthly benefit is $1,923 for those who retire at age 62, $2,533 for those who retire at 65 and $3,350 for those who retire at 70. This amount will vary for each person depending on the income they earned during their working years, but these are the current maximums. However, anyone born after 1960 will have to wait until 67 to be able to claim the full amount of Social Security they have earned.
Pensions. In 2013, about 36 percent of retirees took their income from a work-sponsored pension plan according to Gallup Economy. However, that number will be dropping quickly because only 20 percent of workers in 2011 had access to pension plans. Back in 1984, it was 84 percent of workers.
Length of retirement. All retirees hope to live a long life and enjoy their golden years for many years to come however, they’ll have to plan wisely. The average number of years most people spend in retirement is 18. Estimated calculations show that a single person who spends $2,000 a month (during retirement) for living expenses will need $333,392 in savings to sustain 20 years of retirement.
Health care expenses. One of the biggest fluctuating cost factors of retirement will be health care, and if there is a need for long-term care. Even with Medicare and Medicaid, there are still costs for doctor visits, prescriptions and lab tests. The total cost for a couple 65-years-old and older to cover medical treatment for 20 years is $215,000. This of course could increase with the need for assisted living, a nursing home or other forms of long-term care.
It’s never too late to start saving for retirement, even though it’s recommended to start sooner rather than later. Take advantage of workplace retirement saving account benefits, and work with a financial advisor to find other investment avenues you may qualify for.