As we get older, we realize that most of us would not like to have to work until the day we die. We like the thought of being able to enjoy the easy life when things naturally slow down, and not have to go to work anymore. What is retirement? Retirement refers to the time when you stop working and relax, living off of your savings. After living through four years of financial turbulence and looking at increasing financial uncertainty around the globe, most of us are no longer sure that the traditional view of retirement even still possible.
In America, most people in the last half century or so, have been able to retire at about age 65 because the economy was good. This enabled them to put money away into some sort of savings plan, and to be able to supplement it with the Social Security income. Some were even able to retire after working only 20 or 30 years.
This has changed recently, however, because of changes in the economic situation. Two things have now made the dream of retirement more difficult for many people. The first thing is that there is a poorer economy, which means that many people are not going to be able to save enough money so that they can retire. A second factor is that people are now living longer than before – requiring that either more money be saved by age 65, or that they work until they are older. CNNMoney mentions that less is needed if you continue working part-time.
Many people are being forced, or have already been forced, into retirement – whether they are ready for it or not. This has happened because of the thinking in industry that younger is better. This has led to many older people being “let go” (another word for fired) after they reached a certain age, and were replaced with a much younger individual.
After being let go, or deciding that they want to work less, many people over 50 are finding it difficult to get hired. Companies are hiring fewer people, and they are offering fewer benefits to those they do hire. This means that they may not contribute to a retirement fund, or even pay for health insurance – which would have enabled more money to go into a retirement savings program.
In the past, it was easier to save for retirement. This was because people did not live so long, and most died within a few years after they hit 65. This meant that they did not need to save a large amount of money. Now, says Marc Freedman, in a book called The Big Shift: Navigating the New Stage Beyond Midlife, retirement could possibly last as long as a quarter of a century – and it could include as many as a quarter of the population.
Being able to enjoy retirement now will largely depend on how much money you are able to save beforehand. What is retirement will depend on whether you’re thinking about retiring today or in ten years. Social Security benefits are limited and will not provide enough to maintain your living standard. The Social Security website advises people to seriously consider what age you are going to retire at in order to get enough benefits. If you retire earlier, you will get fewer benefits each month. Waiting longer will enable you to get more benefits monthly. For instance, the chart at the above link shows that waiting four more years – until 66 instead of 62 – will enable you to receive 25% more benefits each month.