Pensions, early retirement, and spending the Golden Years at active adult communities are practically relics. Nowadays, some Baby Boomers are looking at an entirely different type of retirement from the one their parents had, and those who are even younger may see additional changes as they plan for the future.
How Retirement is Different Today
The full retirement age for social security benefits is 67. For decades, the full retirement age (FRA) in the eyes of the Social Security Administration (SSA) was 65 years old. That has changed, however, and for anyone who was born in 1960 or later, the FRA is now 67 years old. Your social security benefits may vary depending on when you were born and when you start to collect.
Out with the pension, in with the 401(k). According to the U.S. Bureau of Labor Statistics, just a quarter of Americans working today have the security of a pension – most of them union members. Due to rising costs, many employers dropped pension plans and replaced them with employee retirement programs, such as the 401(k). This puts the burden of saving for retirement on employees, making it even more important to contribute enough to your retirement plan.
The line between work and retirement isn’t much of a line. Due to the changes in social security benefits and employee retirement plans – and because people are living longer in general – you may need to work more years than your parents did in order to have enough money to retire. Of course, some “retirees” are going back to work not only for cash flow but also because they genuinely enjoy working.
Fewer commitments to retirement communities. Once upon a time, retirees flew the coop for warmer climates and heavily advertised retirement meccas in Florida and Arizona. Nowadays, some retirees are choosing to age in place –modifying a current home to accommodate physical changes later in life – or are transferring to foreign countries where the cost of living may be cheaper.
We’re living longer, and that’s costing more in retirement. Medical advances have made it possible to extend our life expectancies; however, some people may require even more medical and health care as they age. In fact, the average 65-year-old couple will need upwards of $400,000 to cover health care in retirement, according to Fidelity Benefits Consulting..
The days of spending retirement as an “extended vacation” seem like a fairytale, but that doesn’t mean your retirement has to be anything less. In fact, now that you know what to expect, it can help you be even more prepared for the lifestyle you want to have…whether that’s opening up your own business or starting adventures in your new home abroad.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Insurance guarantees are based on the claims paying ability of the issuer.