The Right Time to Retire

Living Longer, Healthier Lives

      At the turn of the 20th century, the average life expectancy was 47 years. Today, the average American can look forward to about 78 years of life. For individuals aged 65, average life expectancy is 81 for men and 84 for women.

      What’s behind this trend? Some causes are obvious, such as improved health care, both early on in the form of preventative medicine and during the later years of life. Medical advances allow older Americans to remain active. Healthier lifestyles are also a contributing factor.

A Different Perspective on Age

      The result is a new way of thinking about age. The period between ages 45 and 65 is no longer middle and old age. As a consequence, today’s older American doesn’t hesitate to change jobs or careers in the pursuit of keeping life interesting. This trend should accelerate. A nationwide survey of workers revealed that 67% of respondents plan to continue working in some capacity after retirement.

Pension and Social Security

      There is widespread concern about at least one traditional source of income for retirees — Social Security Income. Under current conditions, Social Security funds could fall short of needs by year 2040. But the reality is that Social Security was intended only to supplement other sources of retirement income. In fact, Social Security benefits account for only 39% of the average retiree’s income.

      Even pension plans, once considered a staple of retirement income, only account for 19% of the retirement-income pie. In recent years, employers have been moving from traditional defined-benefit plans based on salary and years of service to defined-contribution plans, funded primarily by the employees.

      This shift makes it even more important for individuals to understand their goals and have a well-thought out financial plan that focuses on the key source of retirement income which is personal savings and investments.

Points to Ponder

• As people live longer and healthier lives, retirement begins to take on a whole new perspective.
• You’ll need to adopt a financial plan suited to your specific vision of the future.
• Under the current trend, Social Security funds could fall short of needs after year 2040.
• There might be a need to rely on your own personal savings and investments for the majority of your income retirement.