3 Reasons Retiring Is Not as Easy as It Was 30 Years Ago
Written by
Chris Adam
Edited by
T. Woods
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Retirement used to be a target that many American workers strived for and couldn’t wait to achieve. Now, more and more people are setting that target back by a few years.
Some are doing it because they desire to work longer and have more money to spend in retirement. Others are being forced to wait because of outside circumstances.
According to Gallup, the average expected retirement age among non-retirees is now 66. That’s compared to 60 in 1995. Further, the average retirement age among retirees is now 61, up from 57 in the 1990s.
Here are some reasons retiring is not as easy as it was a few decades ago.
Lack of Savings
You may be familiar with the 80% Rule and its impact on retirement. It’s where you plan to spend about 80% of your pre-retirement income per year. If you’re hoping Social Security will help you here – it’s not going to even come close, based on current amounts.
Most people and families aren’t even in the ballpark of having those kinds of savings for retirement. In fact, CBS News reported the average amount held in a retirement account today is $88,400. That’s far from the amount people predict they’ll need for retirement.
So what are some good ways to boost those savings closer to a livable amount? According to BlackRock CEO Larry Fink, “Investing…allows people to take advantage of capital markets and compounding.” He said savings strategies need to go beyond vanilla bank accounts.
Longer Life Spans
The good news is that people are living longer today – the bad news is that means more money is required for retirement. According to Fink, the current retirement system in the United States was based on statistics from 50 years ago when the average life expectancy was below 70.
Since people are living longer, that generally means more years spent in retirement. That need for more money to cover more years is another reason retiring is not as easy as it was a few decades ago.
Higher Costs of Out-of-Pocket Healthcare Expenses
According to Yahoo Finance, “The decline in employer-provided retiree health insurance has pushed workers to postpone retirement until they’re eligible for Medicare at age 65.”
That means retirees are forced to find other ways to pay for healthcare expenses, which continue to rise. Many retirees also find that Medicare doesn’t cover healthcare costs like they expected. These medical costs are another reason why retiring isn’t as easy today as it was back in the 1990s.
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