Talk about a case of bad timing: the baby boomer generation have started hitting the retirement age during one of the worst economic disasters in modern history.
the oldest boomers began to 65 in 2011, as the economy has struggled to recover from the devastating collapse of the market and the recession that began with the financial crisis of 08.
Middle-class Americans approaching retirement age (50-64) were down 22.4 percent in net worth during the great recession (07-10), a study of AARP public Policy Institute.
the only cohort that saw a larger decline was the age group 25-49 years (44.9%), but they also have more years to rebuild wealth before retirement.
for households approaching retirement who have taken big hits, it is a struggle to catch up.
If this description fits you, here are some solid block and tackle-retirement strategies worth considering. None are easily achieved, but they do not require magic either.
Consider working longer
Not forever, just longer. Adding a few more years can be a huge point of strengthening the long-term security of retirement leverage
This is not an option for all older Americans - .. unemployment and health problems can occur
But working longer allows you to continue to contribute to retirement savings, the construction of additional balances that can be put to work on the market. And each additional year of labor income is a year when you are not drawing down retirement balances.
More working years also create the opportunity to delay filing for Social Security.
than below, but research by T. Rowe Price found that only three additional years of work beyond 66 can increase annual retirement income security on the road social and investment of 50 percent or more.
Delay Social Security
Social Security is by far the biggest asset retirement for all but the wealthiest Americans and the only source of guaranteed income for life with adjustments annual value of inflation.
You can drop from 62 and about 40 percent of us do, according to the administration of social security.
benefits are adjusted up or down by about eight per cent per year, depending on where you take advantages over what is called the retirement age - currently 66.
you get a credit for each year you wait until age 70 of
waiting is not right for everyone. If you are in poor health and do not expect to have a long retirement, or you are in a desperate situation due to a job loss, early filing may be a sensible step.
But the figures show that most people will do better to wait at least until the age of full retirement.
This is especially true for married couples.
The chances of a spouse who better than -Average life are high, and the social security benefits can be critical to surviving spouses in old age, while other resources are often exhausted.
Working longer is one way to finance a delay, but the research also shows that many pensioners can come ahead of the long term by delaying social security, even if it means tapping into retirement savings to finance expenditure for a while.
This may be an effective way to "buy" additional annuity income in later years. And increasing the annuity income to ease the pressure on portfolios such a big part of this life portfolio can be extended substantially.
A research team concluded that portfolios ranging from $ 0,000 to $ 700,000 appreciated the greater extension of life, ranging from two to 10 years.
The strategy works best for easy mass of customers because Social Security represents a greater proportion of the total net value than it does for the richest households.
Accelerating retirement account contributions
If you are able to accelerate retirement account contributions, by all means, do so. If you are still working, make sure you capture all of a matching contribution from your employer.
For IRAs, deductible annual limit of tax is $ 5,500, but you can make an additional $ 1,000 in "catch up contributions" a year if you are over 50 years
to 401 (k) accounts, the annual contribution limit is $ 17.500, the catch limit is an additional $ 5.500
Adjust spending plans
Throw. a careful look at what you really need to spend in retirement. tips off-the-rack of the financial services industry is that people should aim to have enough savings to replace 80 percent of income before retirement.
But a growing body of research suggests that not more than a very general starting point, and it is most often off-target.
a recent study found that Morningstar the actual required replacement rate ranges from under 54 percent to over 87 percent. Research also shows that expenses tend to fall as we get into later ages, with the exception of health care costs.
So take your best shot to anticipate what you think you'll really need for non-discretionary expenses (housing, food, health insurance on pocket costs, utilities, transportation, clothing, etc.).
Then give careful thought to what you expect to spend on discretionary items.
If the numbers do not add up, be prepared to make changes.
One obvious potential target to reduce spending is housing. AARP Public Policy Institute reports that 29 percent of households in the middle class over 50 years paid more than 30 percent of their income on housing in 09, up 20 percent as recently as 00.
part of households spending 50 percent or more of their income on housing has nearly doubled during this period, at 9 percent.
Downsizing can reduce your monthly nut for mortgage payments, property taxes and insurance, and it does not necessarily need to travel across the country.
A growing number of retirees find that they can reduce expenses by moving to the cheapest nearby locations.
A fantastic resource on how to rethink pension expenditure is less to Retire Than You Think, a book by Fred Brock, retired columnist for the New York Times.
With the recent economic struggle and collapse of the market, at what age do you think you'll be able to retire?
photo credit: SalFalko via photopin cc
0 Komentar