3 Trends that Could Affect Your Future
There’s been a lot of disruption in the financial markets in the last few years and many Americans are feeling troubled by the changes and uncertainties. Some Gen- Xers and Baby Boomers are still playing catch-up after the Recession ate into their savings and now the pandemic has caused more financial chaos.
Gen-Zs and Millennials are not as financially literate as they should be, and a volatile market could make their financial future a minefield.
Here are a few trends that could impact your retirement plan:
Retirement and Longevity: Although the 2019 Retirement Confidence Survey found that overall Americans are feeling more confident about their ability to retire comfortably, 34 percent of workers expect to retire at 70 or beyond or not at all. These are their reasons:
Can’t afford to retire (49 percent) • Lack faith in Social Security (46 percent) • Health care costs (45 percent) • Wanting to make sure they have enough money to retire comfortably (44 percent) • Higher-than-expected cost of living (41 percent) • Need to pay current expenses first (36 percent) • The poor economy (32 percent)
Another major reason is the extended life expectancy statistics. In 1960, the life expectancy of a man retiring at 62 was 74. In 2019, according to data from the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84. A woman turning age 65 today can expect to live, on average, until age 86.5.
If you started your retirement planning in the 70s or even in the 80s, the goals you set will be woefully inadequate. This extended lifespan means you’ll have to provide for 20-odd years of retirement at a time when your health may be an issue and healthcare costs are spiraling.
Volatile Markets and The Sensible Middle Ground of Investing®: The markets can be volatile, and if you’re not a savvy investor, you could take a large hit to your plan. Many Boomers started their retirement plans when the interest rates were high. The current low rates are creating a situation where their investments won’t deliver what they had expected back in the day. Gambling with your investments is not the best idea. Work with your advisor, and find a range of investments based on real value that are designed to pay dividends, distributions, or interest.
Taking Advantage of Financial Technology: Millennials are already tech savvy and are adopting financial apps to help them plan for retirement. Boomers are also realizing that their smart phones can be a tool to access and manage their investments. An Ernst & Young survey revealed that the adoption of financial technology among Boomers is growing faster than among other generations.
These three trends could help you plan new goals for the extended retirement time and give you the confidence to retire when the time comes.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC