Longer Life Expectancies
- Longer life expectancies increase the risk of retirees outliving at least a portion of their retirement income. Those reaching age 100 are fastest growing population segment in the United States.
Discipline to Save
- Many people find it difficult to form the habit of “paying themselves first,” by making regular deposits to a savings plan.
Saving to Spend
- Money is saved for retirement purposes, but then is spent to make purchases.
- Income taxes can erode the growth of your retirement savings and as I write this we do not know what the 2013 tax rates will be.
- Longer life expectancies also increase the risk of inflation eroding the purchasing power of retirement income. For example, if inflation increases at 3.5% a year, it would require over $14,000 in 10 years in order to maintain the original purchasing power of $10,000.
Since Social Security and your company pension plan probably will not provide the income you need for a financially-secure retirement, how can you overcome the obstacles you face in planning for retirement?