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OCT
11
Aspire to Retire: What Will it Require?

I really don't like being the "bearer of bad news," but somebody has to do it. Hopefully, you are not among the retirement savings statistics I outline below. But if you are, you may already know what to do. But, if you don't, perhaps I can help. So, first here is the bad news:

If you're like most people, you haven't made adequate plans to ensure a comfortable lifestyle throughout retirement. Now here is the good news:

You may still have time to do something about it (as long as you're not 83 years old).

You see, according to a new study[1] of almost 1,500 Americans by the National Bureau of Economic Research (NBER), many people lack essential financial literacy, and for most, prospects for a secure retirement may be even dimmer than feared. According to NBER:

  • Less than one in 10 respondents was able to answer basic financial questions correctly.
  • About 50% said they had trouble keeping up with monthly bills.
  • Only about half had "rainy day" funds large enough to cover expenses for three months in case of lost income.
  • Almost one-third had done something resulting in an interest charge or fee for credit card charges.
  • Only 42% said they have tried to figure out how much to save for retirement. Of those between the ages of 45 and 59, more than half said they hadn't calculated how much they'll need for retirement.
  • Only 51% had a retirement account with an employer, and just 28% had another retirement account such as an IRA.
  • During the past year, 9% of those with a 401(k), IRA, or another retirement account tapped the account prematurely.

Wow, that's pretty scary. Additional disappointing data[2] from the Employee Benefit Research Institute (EBRI) show what people have actually saved.

  • Less than one worker in two has even managed to set aside $25,000.
  • Fewer than one in four has reached $100,000 -- itself only enough to generate $5,000 a year.
  • Among workers older than 45, just 54% have even managed to save $25,000 or more.

 The one bright spot in all of this: These EBRI numbers do not include the value of people's homes. If you have a lot of equity in your home, you can convert that into extra savings if you need to, either by selling or by using a cash-out reverse mortgage, which allows you to convert some of your equity into cash. (They typically involve high fees. But they are, at least, one option.)

If you are facing a retirement-savings crisis, the strategies here you already know but are worth reviewing and taking action now, instead of later. They include scaling back on expenses, moving somewhere much cheaper and delaying retirement as long as possible. Working longer gives you longer to save, it gives your savings longer to grow, it reduces the length of time you will need to live off your savings and it boosts your Social Security income. Even working part time can help. You may even consider turning a hobby into a business after you retire, i.e. if you love cooking perhaps a local catering business would be fun for you. Or if you love photography, consider taking pictures at local weddings, baby showers, or for holiday events.

The average life expectancy in the U.S. these days is about 75 for a man and 80 for a woman. If you are still going strong in your 80s, you need to be financial secure and not find yourself running out of money before you run out of breath. There are no easy answers. But the real problem is that most people still don't even understand the questions to ask themselves about retirement and how much money they will need to live a comfortable lifestyle. 

My team and I are here to discuss retirement issues with you, and help with planning strategies. If you need any other financial planning or wealth management help or advice, you can call me at 732-974-3770, write me at tom@froehlichfinancial.com or visit us at www.froehlichfinancial.com .

See you next time!

Tom

Securities offered through American Portfolios Financial Services, Inc. Member: FINRA, SIPC. Investment Advisory services are offered through American Portfolios Advisors, Inc., an SEC Registered Investment Advisor. Froehlich Financial Group, LTD is not an affiliate of APA or APFS.

Disclosure: If legal, tax, or other expert assistance is required, the services of a competent professional should be sought. This article is for informational purposes only.



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Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

Securities offered through American Portfolios Financial Services, Inc. Member: FINRASIPC. Investment Advisory products/services are offered through American Portfolios Advisors, Inc., a SEC Registered Investment Advisor. Froehlich Financial Group, Ltd. and American Executive Benefits, Inc. are not affiliates of APA or APFS. Executive wealth management products/services are offered through Froehlich Financial Group, LTD. a registered investment advisor



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