Worth Knowing In Advance: Nasty Surprises in US Pension Security

It's never too late to get your retirement plans in order. GoBankingRates.

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Many Americans work hard all their lives and dream of the day when they can finally retire. But planning for retirement requires more than just daydreaming. This means, among other things, strategy and focus on saving money.

According to a Gallup poll, the average retirement age for Americans is 66 (up from 1990 in the 60s). With an average life expectancy of 78,7 years, that's a good 12+ years to enjoy a slower, quieter life. But there are several unpleasant discoveries that may await you on the way to this well-deserved rest.

Young people think they will retire early ... until they get older

According to a Gallup poll, when 18-29-year-olds were asked about retirement, young people expressed optimism that they could do so before they were 60. However, by the time they turn 30, this optimism diminishes, perhaps because they already realize how difficult it is to make a living.

Life in retirement may be longer than expected

Life expectancy isn't the best way to calculate how much money you'll need in retirement; many Americans live much longer than 78,7 years. According to the Social Security Administration, a healthy 65-year-old woman has a very good chance of living to age 86, and a 65-year-old man has a good chance of living to age 84. It is important to save money for your “retirement” period of at least 20 years.

The Americans seem to understand this. According to a study by TD Ameritrade, 81% of Americans, unlike previous generations, try to cut costs in advance, buy good life insurance and maximize their contributions to retirement plans.

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Many Americans access retirement funds early

There is also an opposite trend - Americans have become more likely to receive money from their pension funds. A TD Ameritrade survey found that 44% of Americans ages 40 to 79 have given up a retirement plan: 46% of people ages 40 to 49 and 53% of people ages 70 to 79.

Withdrawing money from a retirement plan early usually entails financial penalties, so experts do not recommend doing this.

Not all Americans have retirement plans.

According to a TransAmerica Center poll, 77% of American workers save for the future through employer-sponsored retirement plans and other plans. The average age of employees starting to form pension savings is 27 years. However, 33% of employees are left without a real savings plan.

Americans focus on savings

Despite the fact that 77% of Americans have retirement plans, many people simply do not have enough savings to support their lives after retirement at the same level as in their working years. For Americans aged 2017 to 55, the average retirement savings were just over $ 64, according to a 107 report by the Government Accountability Office (GAO). The GAO notes that this amount, which may seem significant, will translate into just $ 000 monthly payments, and only if it is invested in an inflation-protected annuity.

You can't completely rely on social security

If you're counting on social security to fund your post-retirement life, keep in mind that, according to Business Insider, social security is only guaranteed to be funded until 2035, after which maybe only three-quarters. This means that people who are already receiving money may face a drop in payments, and new retirees may have problems receiving money in general. This is partly due to the increase in the number of older people. By 2035, the number of Americans aged 65 and over will increase from about 56 million today to over 78 million. Thus, more people will take money from the general fund, but fewer people will pay into it.

You may be forced to retire before you are ready

While it's nice to have a retirement plan, sometimes there are other plans in life. According to a TD Ameritrade poll, the most common reasons for retirement are health and job change. Half of Americans retired earlier than they would like, for reasons including layoffs, caring responsibilities for family members, unexpected changes in their financial situation and health problems.

Retirement Needs More Money Than You Think

Experts suggest that in order to maintain or approach your lifestyle while working, you need to save between $ 500 and $ 000 million to fund retirement years. This is a significant amount of change that will take years to accumulate.

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Help with care is an expensive pleasure

According to the US Department of Health and Human Services, there is a 65% chance that an American 70 and older will need long-term care at some point. If it is related to a nursing facility, the costs can be incredibly high and Medicare will not cover them. The average cost of living with home care is $ 4051 per month, more than double that of a nursing home. This does not include other health care costs. This is why many seniors in their 60s choose long-term care insurance.

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