A digest of timely information and insight about finance, investing, and retirement.
When planning for retirement, it’s important to understand where your income will come from. Knowing all of your possible sources of retirement income will help you accurately determine how much of your money needs to come from retirement investments you make throughout your career. Unfortunately, the majority of Americans are anticipating some of their income will come from continuing to work well into their traditional retirement years. While working into your 60s and 70s may seem like a good plan – especially if you’re struggling to save enough to ensure a secure retirement – it’s a plan that’s unlikely to come to fruition for the vast majority of future retirees. And if your retirement security is based on the idea you’ll still have a salary coming in, you’re going to be in dire straits when you find out that working during retirement isn’t in the cards for you.
There’s a lot of talk about the importance of making sure you’re on track for retirement, but what does that actually mean? How do you know if you’re on track? And if you’re not on track, how can you fix it? The answers lie in calculations and assessments you can do at home.
A new Bankrate survey says 76 percent of Americans have at least one financial regret – and among those people, more than half are disappointed with their savings. What’s worse, approximately one quarter of Americans don’t have any retirement savings at all, according to a Federal Reserve survey. And yet another survey showed that while 67 percent of Americans said they’re totally confident about their savings, only 42 percent actually tried to calculate the amount they’d need. “They feel confident,” said CBS News business analyst Jill Schlesinger. “I’m not exactly sure why they feel so confident. [It’s] because the economy’s better, because jobs are more plentiful, because they’re getting wage increases, but we really need people to focus on this. Because you are going to responsible for your own retirement years.”
So you’re ready to sock away half your income, earn more through side hustles and aggressively invest so you can become financially independent and retire before age 50. But a big obstacle threatens to keep you from joining the financial independence/retire early movement, popularly known as FIRE: the high costs of health care and health insurance. Without a job and too young for Medicare, what health care insurance options remain for early retirees and their family? A handful, it turns out. “There are already tens of millions that provide their own health insurance whether they’re retired, freelancers, or independent contractors,” says Leif Dahleen, 43, author of the blog Physician on FIRE and an anesthesiologist by trade. “It’s not any different. You just put it in your budget.”
Senators Todd Young, R-Indiana, and Cory Booker, D-New Jersey, have reintroduced the Federal Retirement Commission Act. The Act would create a Federal Retirement Commission to conduct a comprehensive review of private benefit programs in the U.S.; investigate individual and household account balances and investment trends; examine such societal trends as wage and economic growth, health care costs and life expectancy; look into other countries’ retirement programs; and make recommendations to Congress on how to improve private retirement programs. The Commission would consist of the Secretaries of the Treasury, Labor and Commerce; two presidential appointees; and six Senate and House of Representative appointees from each chamber.