This Isn’t Your Parents’ Retirement!

Written by Jeff Helms

The financial world is complex and constantly changing. Those changes can impact our clients and their plans for the future. As the firms founder and Managing Partner, making sense of these changes is my job. We try to simplify communication on market dynamics to make it meaningful and useful for our clients.

October 13, 2015

It’s no secret that a lot has changed since the days of our parents’ retirements. Whether you’ve already begun saving for retirement or have no idea where you stand, the fact remains that affording retirement today is substantially more difficult than it was for previous generations. You’ll have to plan carefully and save more to achieve a happy, comfortable retirement.

As you plan for your future retirement, there are several lessons to learn from our parents’ retirement. Keep these in mind when planning for your own golden years:

Interest Rates Are Lower

When your parents were saving up for retirement, interest rates were much higher than they are today. As a result, they were able to earn more interest on the money they put into their savings and retirement accounts; in other words, their money went further.

Today, interest rates are at all-time lows, which makes saving for retirement more difficult and requires us to be more cognizant of all possible methods for retirement saving.

Debt is Generally Higher

People are also going into retirement with more debt than ever before. In the past, retirees paid off their debts (which was usually just a home mortgage) and retired without owing any money. This left them with more disposable income to use towards a happy retirement. Unfortunately, people planning for retirement today often have greater debt to worry about such as education debt, mortgage debt, and credit card debt, and due to poor planning, are paying these down well into their retirement years.

More People Are Retiring Single

In previous generations, many retired alongside their spouses, which meant they had the luxury of relying on two retirement incomes to support themselves. Today, on the other hand, it’s becoming increasingly common for seniors to retire single. This is due in part to the fact that the divorce rate has spiked.

As a result, many retirees are living on one income, which makes retirement planning all the more important. Even those who are currently married should consider the ramifications of not having a second retirement income on which to rely, and plan accordingly.

Life Expectancies Are Longer

Last but not least, it’s important to remember that today’s life expectancy in the United States is higher than ever before, and it’s only expected to continue increasing. This means that those saving for retirement need to set aside money to last them not just for 12 years or so, but for the potential of living 30 years or more after retirement.

With these lessons in mind, we can plan for better a financial future for ourselves and our loved ones. For assistance with your own retirement planning, schedule a financial check-up with one of our certified financial planners today.