Regardless of how old you are now, you’ll probably have a harder time pulling off a financially secure retirement than your parents did.
A great many of us haven’t planned and saved well. Besides that, fundamental changes in American life make it harder for today’s generations to achieve a comfortable life after work.
Here are eight reasons why the last decades of life are harder now — and some things you can do to bolster your own retirement.
1. We’re living longer
Living that long without working takes a lot more money.
Tip: Find a trusted adviser. A fee-only Certified Financial Planner — preferably someone recommended by a friend or family member — can help you plan for retirement and make the most of your resources. Take time to find someone superb.
2. Seniors can’t shake recent tough times
The Great Recession that ended a decade ago robbed workers of earning power. It hit men and women in their 50s and early 60s especially hard. Home values and investment savings also plummeted.
Some people are still digging out from that hole. And even those who were fortunate enough to pop their heads back above ground now face health and financial headwinds as a result of the coronavirus pandemic.
Tip: Don’t wait, take action. Don’t let pride prevent you from getting help. And don’t spend retirement savings or home equity trying to repay unmanageable debt.
You can seek help by talking with a credit counselor through the nonprofit National Foundation for Credit Counseling, or a bankruptcy attorney through the National Association of Consumer Bankruptcy Attorneys.
3. Private pensions are nearly extinct
Only a few decades ago, many large employers offered “defined-benefit” pensions that guaranteed retirees and their spouses a fixed monthly payment for life. But times have changed, and traditional pensions are going the way of the dinosaur.
Tip: Save more. Without a pension, you simply need to save more for retirement. Follow the basic rules for retirement savings, including minimizing taxes and expenses, working longer, investing regularly and keeping on top of investments.
4. Social Security is still under pressure
Unless Congress acts, Social Security Trust Fund reserves are expected to run out in 2034, according to the Social Security Administration. Costs are outpacing revenues due to a rapidly aging population.
Even if lawmakers address the broader issues, the amount you receive might depend in part on when you start claiming it.
Tip: Be strategic about claiming Social Security. Most people claim Social Security benefits at age 62, which is as soon as they can. But that is not always the best strategy.
Want to get a larger monthly check? Avoid the “10 Things That Can Ding Your Social Security Payments.”
5. Interest rates are low
Retirees in previous generations earned higher interest on their savings and low-risk investments. But interest rates now are near historic lows. That means many of today’s retirees must take on riskier investments to generate income.
Tip: Don’t dip into retirement savings. Lower interest rates mean your savings may disappear more quickly as you spend. But no matter how tight things get, shun the temptation to borrow from retirement savings. Don’t do it for any reason, not even to pay off debt.
And don’t settle for low returns. You can find a better savings rate in our Solutions Center.
6. Seniors have more debt
Earlier generations endeavored to enter retirement with a paid-off home and no debts. That’s harder to do today.
Tip: Get help. Debt won’t go away on its own. Check our Solutions Center for more help getting out of credit card debt.
7. Folks might have to retire sooner than they hoped
Many workers today are counting on working into their late 60s and early 70s. But poor health, a job loss or the need to care for loved ones can force people to retire before then.
Tip: Let the kids fend for themselves. Many of today’s young adults struggle to launch independent lives. But funding an adult child’s lifestyle can doom your own retirement.
So, put your retirement savings ahead of paying for your children’s college. The kids have more time than you do to make up financial losses.
8. More seniors are single
About 12 million adults age 65 and older live alone, according to a 2016 study from the Pew Research Center.
Many find freedom in being single, but it can be difficult for one person to support a household financially.
Tip: Don’t touch home equity. If your retirement is looking shaky, don’t even consider using home equity for nonessentials like remodeling. Treat the equity like an emergency fund.