5 Newer Retirement Trends

The Changing Face Of Retirement

5 newer retirement trends affecting your retirement financial planning.  The changing face of retirement affects your retirement nest egg.

If planning your retirement nest egg one of your top concerns read this article by Rick Pendykoski.

Retirement Trends and your retirement nest egg

Baby boomers and millennials alike are focusing their efforts toward saving for an early, comfortable retirement. Whether you leave your IRA savings in someone else’s hands or prefer the complete control offered by a self directed IRA, planning your nest egg is probably one of your top concerns.

However, lower interest rates and the resulting diminishing returns can lead to uncomfortable changes in your financial plan.

IRA and 401K retirement plans

There are two kinds of retirement plans:

• IRAs – An IRA can be set up by an individual to save tax-free or tax-deferred funds for retirement. Capital gains, dividends, and interest earned in an IRA are tax-free. Employers cannot make contributions, but you can save up to $5,500 a year if you’re below 50 and an additional $1,000 annually after 50 (but not more than your total annual income).

• 401Ks – A 401K plan can be set up by an employer, to help employees save funds and invest their savings for retirement. You can contribute up to $18,000 annually if you’re under 50, and an additional $6,000 a year after 50. Employers can make matching contributions, but combined contributions cannot exceed your annual income or $53,000 ($59,000 if you’re over 50).  

There are many typs of IRA and 401K accounts, and with a self directed IRA, you can choose where your savings will be invested. For instance, you could opt to invest IRA in alternative assets that offer greater gains, like real estate.

5 Retirement Trends That Can Impact Your IRA and Other Retirement Savings

1 The Average Lifespan has increased – Today’s seniors are living longer than their older-generation counterparts. Men turning 65 by 2030 are expected to live 6 years longer than those who turned 65 in 1970, with an increase of 4 years in the expected lifespan for women in the same age group.

This means today’s working population needs to save more, to bolster retirement savings that accommodate longer life spans.

2 The Retired Population is on the Rise – Seniors aged 65 and up account for 13% of the total population now, but one out of every 5 adults will be over 65 by 2030. Compared to the 1960s and 1970s where the median age was under 30, the next decade and a half will see the median age rise to 39.6 years (it’s 37.2 now).

This means there will be a greater demand for retiree-related products and services, and the costs of these resources could increase.

3 Retirees are Doing their Own Thing – Whether it’s travel, hobbies or work (running a business, consulting or working part-time), seniors today have access to resources and options that previous generations did not enjoy. They’re also earning more through independent income, or leaving the workforce later.

This means it’s possible to earn and save more before you retire, so you have a larger pool of funds available for your preferred lifestyle later.

4 Health Care Costs are Higher – Despite an overall improvement in health, longer life spans mean that retirees may be paying for healthcare over a longer period too. The cost of health care and related services grows higher every year, and obesity-related conditions (like diabetes) are on the rise.

This means you need a larger healthcare fund as you get older, adequate insurance coverage for long term care, and emergency resources for any challenges you may face.

5 Retirement Debt is Growing – In 2012, almost 25% of retired seniors were still paying mortgages, as compared to 16% in 1998, and the percentage of adults retiring with debt went from 30% to 44% within the same timeframe. Today, the total debt of Baby Boomers is currently over $6 trillion!

This means part of your retirement fund could go into paying off debt, so you need to increase the focus on debt repayment while you’re still working.

Retirement trends affect retirement financial planning

Current retirement trends can affect your contributions as well as the returns you expect from them later in life. Take them into consideration as you plan for your leisure years, so you can enjoy the retirement you always dreamed of.

Author

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly writes for blogs at MoneyForLunch, Biggerpocket, SocialMediaToday, NuWireInvestor & his own blog for Self Directed Retirement Plans. He writes about topics related to retirement planning, investing, and securing future.

Disclaimer

No information or opinion contained in this article should be taken as a solicitation or offer to buy or sell any financial instruments or services. Any opinions, news, research, analysis, prices or other information contained does not constitute investment advice.