Retirement Can be Fantastic – If You’re Prepared

Most Americans dream of retirement free of worry – one where they have the time and resources to travel, spend time with family, and live life the way they want to after years of work.

That’s true across generations, from Baby Boomers and Generation Xers to Millennials, according to the19th Annual Transamerica Retirement Survey from the nonprofit Transamerica Center for Retirement Studies.

In addition to exploring what retirement means to Americans, the survey looked at financial preparations and steps they are taking toward safeguarding their health, happiness, and work-life balance. Like many recent studies, it found Americans are not prepared financially to be able to enjoy a retirement free from money worries. This is especially worrisome when you consider people today are living longer than ever before.

The survey looked at a nationally representative sample of 5,923 full- and part-time workers. Some of its findings include:

• Two out of three people say their big retirement dream is travel. Half of those said they’re looking forward to spending time with their family and friends, and almost half look forward to pursuing hobbies.
• Half of those surveyed have less than $50,000 total in all their household retirement accounts. Baby Boomers have the highest estimated median retirement savings at $152,000 compared with Generation X at $66,000 and Millennials at $23,000.
• The most frequently cited retirement fears are outliving savings and investments (48 percent), a reduction in or elimination of Social Security (44 percent), declining health that requires long-term care (41 percent), and not being able to meet the family’s basic financial needs (40 percent).

Many people surveyed said they have not yet fully recovered from the economic impact of the Great Recession. Thirty-seven percent have “somewhat recovered,” 14 percent have “not yet begun to recover,” and 8 percent feel they may “never recover.”

The survey also found that Americans’ emergency savings are “alarmingly low.” The average amount that survey respondents have socked away for emergencies is $5,000. That probably explains why one in three people surveyed has dipped into their retirement accounts early.

The average savings of only $50,000 in retirement accounts should raise alarms that many Americans are falling far short of their dreams of leisure, travel, and free time. Many people (55 percent of those surveyed) plan to keep working either part- or full-time in retirement, which means they may be retirement-aged, but they are not really retired.

It is easy to feel pessimistic when you hear statistics such as these, but that won’t serve you when it comes to building security for your future. Here are some simple steps you can take that will make a difference.

• Take care of your health. The Transamerica survey found that just 16 percent of Baby Boomers said their health is “excellent,” and only about half of workers surveyed said they exercise regularly, eat healthily, or get enough sleep. You’ve heard the saying that when you have your health, you have everything. Own it. Daily exercise and healthy eating are among the healthy habits that can help you live long enough and well enough to enjoy retirement.
• Research how much money you’ll need to retire comfortably. Use a retirement calculator to figure out what you’ll need. You can find many retirement calculators online that will allow you to run the numbers and come up with a savings target. Then adjust your personal budget to make sure you are setting aside as much as you can toward your goal.
• Understand the difference between saving and investing, and research alternatives to the widespread (but faulty) advice that says you must risk your savings in volatile investments in order to grow a healthy nest egg.

Don’t be the one who says, “I have enough money to last me the rest of my life … if I die next Tuesday.” You can have more freedom and less stress in retirement, but you have to start planning – and saving – now.

About the Author: Pamela Yellen is the founder of Bank On Yourself, a financial investigator, and the author of two New York Times best-selling books, including her latest, “The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future.” Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans.