Are You Truly Prepared?
Retirement is a time to enjoy the fruits of your labor, but for many, it comes with significant financial concerns. According to a recent study by the Society of Actuaries, few retirees have a comprehensive financial plan, even as worries about retirement risks grow. Let’s take a closer look at these concerns and explore steps to create a more secure retirement plan.
Top Retirement Concerns
The 2011 Risks and Process of Retirement Survey surveyed 1,600 individuals aged 45 to 80, evenly split between retirees and pre-retirees. It revealed several key concerns:
- Inflation: Keeping savings and investments aligned with rising costs.
- Healthcare Costs: Ensuring sufficient funds for adequate medical care.
- Long-Term Care Expenses: Preparing for potential costs associated with aging.
- Savings Depletion: Avoiding the risk of running out of money.
- Income Variability: Managing changes in income due to fluctuating interest rates.
Pre-retirees were particularly worried about maintaining their standard of living and coping with these risks, yet many overlooked critical planning components, such as insurance products.
The Overlooked Role of Insurance
Anna Rappaport, chairperson of the Society of Actuaries’ Committee on Post-Retirement Needs and Risks, highlighted a significant gap in planning:
“Except for health coverage, insurance products such as annuities and long-term care insurance are not seen as major components of retirement planning. As a result, many retirees continue to be at risk of running out of assets and having to rely solely on Social Security.”
Without these protections, retirees face the possibility of financial instability and a diminished quality of life in their later years.
Planning Ahead: The Numbers Don’t Lie
The survey also found that only:
- 35% of pre-retirees had a plan for financing their retirement.
- 57% of retirees had mapped out how much they would spend each year and where those funds would come from—a significant improvement from 44% in 2005.
Experts advise that retirees need at least 70% of their pre-retirement income to maintain their lifestyle. However, findings from the 2010 Retirement Confidence Survey by the Employee Benefit Research Institute revealed varying spending habits among retirees:
- 49% spend less than they did before retirement.
- 37% maintain consistent spending levels.
- 13% increase their spending.
These statistics underscore the importance of personalized planning based on individual needs and circumstances.
Small Business Owners and Retirement
Small business owners face unique challenges when it comes to retirement planning. A survey by the Guardian Life Small Business Research Institute found:
- 45% of small business owners felt well-prepared for retirement.
- Nearly two-thirds feared outliving their savings.
These figures highlight the importance of proactive planning, especially for individuals managing their own businesses and retirement funds.
Take Control of Your Retirement
Retirement planning isn’t just about saving—it’s about creating a strategy that aligns with your goals, needs, and lifestyle. Here are a few steps to get started:
- Calculate Your Needs: Estimate your retirement expenses and determine how much income you’ll need to maintain your lifestyle.
- Explore Insurance Options: Consider annuities, long-term care insurance, and other products that can provide financial security.
- Create a Spending Plan: Map out your annual expenses and income sources to avoid surprises.
- Seek Expert Advice: Consult with a financial advisor to develop a comprehensive plan tailored to your situation.
Let First United Bank & Trust Help You Plan for the Future
At My Bank, we’re here to guide you through every step of your retirement planning journey. From savings accounts to investment options, we’ll help you build a plan that ensures peace of mind for your golden years. Ready to secure your future? Visit your local branch, call us, or explore our resources. Let’s work together to make your retirement dreams a reality.