David Lerner Associates: The American Retirement Crisis

In 1900, the typical American lived to age 47. Today, that figure is age 77. [0] In 1900, thirteen percent of the population was age 50 and over. In 2002, it was over 27 percent. By 2020, it will be over 35 percent.

Already this growth in the older age group has changed the face of the U.S. workforce. The share of workers age 55 and over hit 22.2 percent in July 2014, according to data released by the Bureau of Labor Statistics. That’s the highest since record-keeping began in 1948.

One of the reasons for this older workforce is the fact that many Americans over 55 are not prepared for retirement – nearly 29 percent have neither retirement savings nor a traditional pension plan. For those over 55 who are saving, the median account value is $103,000.

5 Steps to a Better Retirement Plan

1. Start saving as early as possible. The longer you save, the better off you will be. Compound interest over time is what does the trick, and the more time you have to let it work, the better.
2. If you are already in your 50s, make this a financial priority. Start right now. Delay spending on non-essential items, and put away as much as you possibly can. If you are employed, contribute to your employer’s retirement plan. If you are self-employed, set up an IRA.
3. Find out how much Social Security you will be eligible for when you reach retirement age. Ask for the number at 65 and at 70. You may have to delay taking your benefits so that you get a little more.
4. Figure out your retirement expenses. Be realistic. If you won’t be able to maintain your current lifestyle, start thinking about alternatives that could still give you a comfortable retirement but would be much more affordable. The 2015 Forbes list of the 25 best places to retire has some very attractive options.
5. If there is still a shortfall between your projected retirement income and expenses, start looking at other sources of income you can generate after you reach retirement age. Some famous people did not start their successful careers until well after the age of 55. However, be vigilant, and do your due diligence when evaluating a new business opportunity.

That old saying “better late than never” applies to your retirement planning. Figure it out now so that you can look forward to a comfortable retirement when the time comes.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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