More Americans are getting used to the idea that they won’t be retiring at 60, and not at 65, either. The average age of estimated retirement continues to climb, with many expecting to work until they are 70 or 80.
A Northwestern Mutual study conducted in 2013 found that only 56% of Americans are financially prepared for retirement. This is a major gap in retirement planing, which explains the reason so many keep pushing back the year of their retirement. But what caused this gap in finances?
Angela DiCastri, director of retirement markets at Northwestern Mutual, says there are a number of factors that contribute to the new norm.
“Many people in the pre-retirement age bracket lost significant wealth during the housing crisis and recession,” she explained. “There’s also the issue of ‘boomerang children.’ These are young people who have moved back in with their parents after college or early in their careers due to financial hardship. Very few pre-retirees had planned on supporting children again, so this becomes a significant and unexpected financial burden.”
Having a discussion
with your spouse about what type of retirement life you want to lead is important, as there are always differing opinions and images set in people’s minds about what it will be like. Budgeting for various expenses is important, too. That may sound like a no-brainer, but there are often a few costs that most people completely forget about until the time comes.
Long term care is one of those expenses, and it can add up quickly. A private room in a nursing home now averages more than $90,000 annually, a steep price for care. This explains why many are turning to family caregivers to take over, rather than pay professional caregivers. This choice, too, often leads to a great deal of stress and tension among family members.
Adjust Your Savings
Instead of planning to have a loved one care for you, begin investing and budgeting for those expenses yourself. Long term care insurance can help you cover the cost without paying the full out of pocket price. Get a free comparison of the top companies and policies today.
According to the Northwestern Mutual study, the average age that pre-retirees currently expect to retire has gone up t0 68. The dynamics of retirement are shifting and it is time for consumers to catch up with the trends and begin saving earlier and accounting for retirement income, too.
Read more about the Northwestern Mutual study on Forbes.