A digest of timely information and insight about finance, investing, and retirement.
Even those who have met their 80 percent income replacement goal will need more to cover all health care expenses, according to HealthView Services’ new 2016 Retirement Health Care Costs Data Report. The average healthy 65-year-old couple retiring this year is projected to spend $288,400 in today’s dollars on lifetime Medicare Parts B, D and supplemental insurance (Plan F) premiums. And when dental, hearing, vision and all other out-of-pocket expenses are included, the total retirement health care bill rises o $377,412, the study shows.
The Federal Reserve’s 2015 report on US household economic well-being asked respondents with either a defined contribution plan or self-directed retirement plan about their confidence in making decisions for retirement savings. Not quite half, 48 percent, said they were either “not confident” or “just slightly confident” in their ability to make the right investment decisions in these accounts.
Even after stepping away from a full-time job, for many “retirees,” work is still their primary identity. And there are many signs that traditional retirement no longer satisfies as many older people as it once did. A recent study from the Employee Benefit Research Institute found that fewer older Americans say they’re having a great time during retirement.
The very concept of a retirement in which people stop working altogether could soon become a thing of the past, according to a new report from the Aegon Center for Longevity and Retirement. “A Retirement Wake-Up Call: The Aegon Retirement Readiness Survey 2016” shows that people expect to live for 20 years in full retirement, but the reality is that retirement may often be much longer. For some, retirement may involve shifting from full-time to part-time work. For others, it may involve working in a different capacity or pursuing an encore career.
The fields of behavioral finance and behavioral economics have uncovered various biases humans have which are great for day-to-day survival, but somewhat maladaptive for long-term investing. So it’s important to dig beyond the marquee numbers jumping out of the marketing literature and reflect on what is truly happening when all variables and levers are combined into a cohesive whole. [Read more about behavioral finance from PERA on the Issues.]
Planning for retirement can be a very daunting task, even for people who are skilled at working with numbers. There are many unknowns that will affect how much you need to save and how long your money will last when you finally start your golden years.