Think you could retire on $500? Of course not; unfortunately, nearly 30 percent of Americans over the age of 55 have no more than $500 socked away for retirement. It’s alarming, to be sure. This week, we take a look at the facts behind the numbers.
A new Government Accountability Office analysis announced earlier this month that not only do 30 percent of those older than 55 have little or no retirement savings, they also do not have a traditional savings account. The reasons are clear: there’s been no significant rise in wages in years. Many are still paying off student loans, either for themselves or their children and of course, the recession might be a thing of the past, it still takes time for many to recoup what was lost, such as savings accounts.
Meanwhile, Charles Jeszeck, the GAO’s director of education, workforce and income security, said, “We aren’t surprised that people have not saved a lot for money.” He said “many are continuing to struggle financially”.
The analysis also explored median numbers for families concerned about retirement. It found that the median amount is about $104,000 for households with members between 55 and 64 years old. For those households with members between the ages of 65 and 74, their median is at $148,000. This equates to an inflation-protected annuity of $310 and $649 per month, respectively.
Anthony Webb, who is a senior research economist at the Center for Retirement Research at Boston College is also concerned, stating, “I don’t care what anyone says. That’s not enough income for retirement.”
So what can you do if you’re concerned about a late start in retirement planning? Here are a few tips that can help alleviate some of your concerns.
Don’t underestimate the importance of a budget. It’s important to know how much money is going out each month. This is the foundation because you can’t begin to save if you don’t know your budget.
Don’t underestimate proper Social Security planning. Many have been able to increase their monthly income by up to 32 percent just by knowing the facts before applying. Your estate planning attorney can provide guidance.
One of the more common mistakes people make, especially over the past decade, is not planning for a longer lifespan. We’re living longer – which equates to a need for enough money to cover those years. Many are opting to work longer, which can benefit their long term plans.
The vast majority of our clients have children. While parents want to provide for their children, grandchildren and loved ones in their will, it can’t take precedence over your current needs.
Finally, don’t hesitate to ask for help. Our team of estate planning attorneys can assist you in putting trusts in place, we can guide you through the Medicaid approval process and we can show you safe methods that allow you to keep more of your assets.