Showing posts with label retire. Show all posts
Showing posts with label retire. Show all posts

Too chicken to retire



Does the very idea of retirement terrify you? Do you worry that something catastrophic could happen and you'll find yourself living in a cardboard box? Nearly half of all women  -- 49 percent -- fear becoming a "bag lady," according to a recent study of women and how they deal with money and power from Allianz Life Insurance Co.


I was thinking about this statistic Monday night when my husband and I were talking for the umpteenth time about when we're really going to retire. He's an accountant who works for an insurance company and spends all of his days looking at the cost of disaster. Believe me, it skews his outlook, and because I listen to him, it affects mine, as well.


After years together, neither of us is eager to take a whole lot of risk -- financial or otherwise. One of the results has been that whenever we look at his detailed budget and family financial plan, it never seems like it is enough for us to hang up our work boots and relax.


What will happen if the economy goes south and takes our investments with it? Will our adult children stumble and really need us to help out? Could the house that we built on the lake flood and be damaged beyond what flood insurance would cover? What would happen if one of us came down with a really debilitating illness?


Avoiding these kinds of exigencies is what retirement planning is all about, but even the most carefully laid plans can go awry. Monday night, my husband lectured himself on being too cautious, and he set a date to stop going into the office. That's not exactly quitting work, but it's close. Maybe this time, it will really happen. I have my fingers crossed.


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What does it take to retire?



Numbers cross my desk almost daily that purport to reflect Americans' retirement savings shortfall. I saw one this morning from TD Ameritrade that said a boomer couple has on average saved $275,000 for retirement, but needs $475,000 more to retire.


Using Bankrate's Saving's Goal Calculator, I figured that to reach that number, a boomer saver with $275,000 in the bank, who is a decade from retirement, would have to put away an additional $2,850 a month for 10 years, given a 6 percent return. That's an annual savings goal of $34,200. Median household income in the U.S. is about $50,000 a year, according to the U.S. Census Bureau, so that goal would require saving nearly 70 percent of gross income for the person in the middle of the salary spectrum.


No wonder so many people are discouraged about retirement planning. They read those kinds of  reports and climb under the desk, waiting for the bomb to hit. What does it really take to retire? The Gerontology Institute at the University of Massachusetts Boston calculated these minimums: Single individuals: $19,104 to $28,860 annually.Couples: $29,448 to $39,204 annually.


The differences are based on where in the country people live, whether they own or rent, and whether they have a mortgage. Monthly housing costs for homeowners without a mortgage range from a low of $260 per month in West Virginia to a high of $871 per month in New Jersey. Having a mortgage will drive up that cost from a low of $745 per month in West Virginia to a high of $1,871 per month in New Jersey.


The other major variable is health care. If you are sick, all bets are off, but even if you're well, the costs are substantial, ranging from a low of $324 per month per person in Florida to a high of $455 per month per person in Vermont. Medicare doesn't offer a "family plan" provision, so two married individuals don't do any better than singles.


The Institute figures the monthly cost for food for a couple 65 or older to be $446; transportation, $380, and puts miscellaneous costs at $409. This is not a luxury retirement, but it still demands more money than Social Security provides average workers and dependent spouses. The average annual Social Security benefit for a retired worker is $15,179. The average benefit for a couple is $22,722.


If Social Security will be your only source of income, it behooves you to wait until at least full retirement age -- 66 for most retiring in the next few years -- before claiming because benefits rise considerably, getting a lot closer to what the Institute considers minimum incomes. That and a few bucks in the bank would make life in retirement much more comfortable -- even without the additional $475,000 in savings.


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