You may turn to an online retirement calculator for a simple snapshot of your income needs and your savings progress. These calculators are everywhere and so easy to use—but just how realistic are their projections?
In truth, not very. They fail to consider many variables. They may have you enter your present salary, the percentage of income you want to replace in retirement, your estimated retirement date, and the rate of return for your investments. However, they ignore considerations like taxes (especially with regard to retirement account withdrawals), relocation expenses, health care costs, inflation, and your Social Security claiming strategy.
Even their basic calculations can vary: Input the same data into three different calculators, and the amount that you are supposed to save for retirement can vary by as much as $300,000 to $400,000.
So use one or more retirement calculators to run some numbers, but confer with a financial professional you trust to tackle planning for the factors that these basic tools cannot address.
Friends and Family May Make a Big Difference After 65
Gerontologists, mental health professionals, journalists, and retirement planners are starting to recognize loneliness as a retirement hazard. AARP, in fact, now has a website (connect2affect.org) focusing on the issue and the resources that can help to counteract it.
From its research, AARP estimates that 17% of Americans over 65 are cut off from meaningful social interaction. This lonely state raises the risk of mortality by 26%, the organization concludes.
It is all too easy to end up alone for some or all of retirement—in fact, 51% of Americans age 75 and older live by themselves. In addition, the country has about 6 million seniors (defined as age 65 and up) who cannot leave their homes due to disabilities.
To ward off loneliness, think about relocating to (or spending more time in) a livelier neighborhood, or following athletic, social, or creative interests in the company of others. Romantic relationships are possible, not just platonic ones—and if you feel lonely with your spouse or partner, try going somewhere new, even if just for the day, or having a small adventure.
On the Bright Side
In a recent Allianz Life survey of U.S. consumers, a majority of respondents thought consumer prices would rise more than 4% a year during their retirement. Over the past 20 years, however, yearly inflation has averaged just 2.15%.
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Lighthouse Financial, LLC., a Registered Investment Advisor. Cambridge and Lighthouse Financial, LLC., are not affiliated.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
1 – fool.com/retirement/2017/09/10/why-you-shouldnt-rely-on-a-retirement-calculator.aspx [9/10/17]
2 – foxbusiness.com/features/2017/09/03/tips-for-baby-boomers-on-how-to-deal-with-loneliness.html [9/3/17]
3 – foxbusiness.com/features/2017/09/10/inflation-and-your-retirement-realities-vs-myths.html [9/10/17]