Have a GREAT retirement

retirement Risks

If you’re one of the Baby Boomer Generation, you’re probably thinking a lot about stopping work – provided that you haven’t already stopped working.  And if you have already left work, you may be evaluating when you’re going to be able to stay comfortably retired.

Today’s financial crisis compounds the situation considerably by compounding some significant retirement related risk factors:

1. Average Life Expectancy Has Grown

Today, life expectancies are longer than their parents’ generation. For example, in 1970, a 60-year old Caucasian male had a life expectancy of an additional 16.2 years; however, by 2008, his life expectancy had climbed to twenty more years of life.

So how is the Baby Boomer going be able to afford retirement during those extra 3.8 years? There are only a few probable answers to that question:

> Supplement current nest egg building

> Work longer than planned

> Live with with children

> Get by with a reduced standard of living

2. Escalating Health Care Costs

Adequately funding one’s medical care costs are among the most difficult financial planning tasks, largely because health care needs are so individualistic, with needs varying greatly from one person to another. Long-term care needs are even more difficult to plan for and arrange adequate funding.

Health care expenses have grown more than 5% (inflation adjusted) for the past 15 years – and that is higher than the increase in family income. Medicare costs are expected to rise at similar rates.

3. Legislative Changes May Reduce Retirement Income & Supplemental Programs

It is well known that the expenses associated with the major social programs (e.g., Social Security, Medicare, and Medicaid) are growing faster than other parts of the economy, and some economists challenge the long-term feasibility of these programs because of the cumulative effects of increased longevity, size of the retiring population, and increasing health care costs in general.

Further, current questions regarding continued health insurance during retirement, and at what financial levels, are rampant in today’s depressed economy – and these questions are further fueled by the reorganizations occurring, especially among the auto industry.

We are still witnessing much discussion concerning a national health care program – but such discussions have been ongoing for decades, with few results to show for those efforts. Although President Obama will be leading a national health initiative this year, most people expect Congress to present a lot of opposition.

Many expect that seniors over age 55 will be exempted from cuts in these entitlement programs, but maintaining full coverage for them is a two-edged sword – doing so increases the probability of a new value-added tax, which would effectively add to retirement tax burdens.

4. Sometimes One’s Retirement Date is Dictated, and not Freely Chosen

According to a 2004 Health and Retirement Survey (HRS), 37% of seniors are forced to retire due to bad health or economic downturns, etc.

5. 401Ks Have Been Decimated

Were your savings (including your 401k) devastated with the stock market meltdown last year? Mine did. Many people saw their 401k and other stock market accounts take a 50% hit, which has led many comedians to rename them “201k”. For many people, their 401k was the bulk of their retirement savings, so this stock market crash has really damaged their retirement plans.

Humpty Dumpty Was No Financial Planner

Not all the news is bad. Luckily, you can repair a broken “Nest Egg”.

You can work an extra year or two, take a part-time job or work from home to supplement your earnings, start your own business, etc.

A report by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can increase annual retirement income by 9%, while working just five (5) extra years results in an extra 56% annual retirement income.

If you’d like to find out how to produce a second income, so that you can have a luxurious, financially secure retirement, check out Darren Salkeld’s new MaxPro Marketing System and get his FREE Report and FREE Audio describing the age-old secrets of creating wealth.