How pre-retirees and retirees see the future

when thinking about retirementWell, it all comes down to finances. After all, there is a particular lifestyle to which people have become accustomed. A lot of emotional and financial planning goes into retirement.

Most baby boomers are already there. So, what’s retirement like for them? And what about the Generation X group? They are planning for retirement. How is their financial situation, and what do they need to do?

How Retirement Has Traditionally Been Funded

Many financial advisors first recommend the three-legged stool approach when planning for retirement: Social Security, pensions and personal savings. Pensions have since been replaced by 401(k) plans and individual retirement accounts (IRAs).

But the basic principle of financing retirement remains intact. One question mark on the minds of many pre-retirees is Social Security. Will Social Security be there in the next 10 years when these pre-retirees need it? Will a traditional three-legged stool last?

Who is dependent on Social Security?

over 2022 47 million Americans Will receive Social Security retirement benefits. This comes down to $80 billion in profit. It is an important source of income for many retired Americans. But for many it is not the only source of income.

For 37 percent of retired men and 42 percent of retired women, more than half of their income comes from Social Security. The rest comes from retirement funds, savings or work.

But even if they have other sources, social security is an important part of their livelihood.

Others rely even more on Social Security. For example, 12 percent of men and 15 percent of women rely on Social Security for 90 percent or more of their income.

Today’s pre-retirees and retirees face challenges when it comes to financial security. But who are these retirees, and what are they doing to prepare?

Generation X—Today’s Pre-Retired

The group, born between 1965 and 1985, are in their forties and fifties, and are contemplating retirement. This is a resilient generation. They were latch-key kids and survived MTV. They are also the surviving parents and children.

Generation X is often referred to as the “sandwich generation”, as they are among Baby Boomers and Millennials. And as a result, Gen X often finds itself caring for both aging parents and children.

With high debt and ongoing expenses, retirement planning is a cause for concern for many Gen Xers. According to a survey by the National Institute on Retirement Security, ninety-nine percent of Generation X were worried that they would not be able to have a financially secure retirement.

According to the Investopedia survey, Generation X is a financially savvy group. About 80 percent of these pre-retirees have an intermediate or advanced understanding of finance. And they expect Social Security and 401(k)s to be their primary sources of retirement income.

But with adult children coming home, parents moving in, high inflation and stock market volatility, these pre-retirees seem a bit more pessimistic than current retirees.

most retired baby boomers Comfortable

Born between 1946 and 1964, Baby Boomers dominated the workforce for decades. But as they get older, they are now dominating retirement. Many baby boomers have been enjoying retirement for many years.

Current retirees are optimistic. According to the Kiplinger survey, while 64 percent of pre-retirees are concerned about stock market volatility, only 49 percent of current retirees are concerned.

Nearly 70 percent of those surveyed said they expect to live comfortably on their income. Sixty-six percent said that they would not be short of money.

But in the same survey, less than 55 percent of pre-retirees thought they wouldn’t be short of money.

Part of the discrepancy may lie in planning, but retirement age is also a factor.

retirement age a factor

rising retirement age, Americans are staying in the workforce for longer periods of time. In 1992, for example, the average retirement age for men was 62; In 2021, it was 65. The retirement age of women has also increased. In 1992 the median age for women was forty-nine, but in 2021 it increased to 62. In 2021, COVID-19 slightly interrupted this trend. The workers took the opportunity to retire a little early to avoid the shutdown.

Despite the COVID-19 disruption, Americans are working longer hours – and that’s partly because of financial concerns.

Average Monthly Social Security Retirement Check $1,672.76, This doesn’t go far enough when considering that the average monthly mortgage in the United States is $1,100, So there is not much left for living expenses, let alone any nuances of life.

Americans are working long hours to keep paying into 401(k) plans and withdrawing more money into savings. Many start collecting profits, but continue to work. They must supplement their Social Security benefits.

Social Security and Medicare Feasibility

However, pre-retirees and retirees have something in common, and it’s their concern over the viability of Social Security and Medicare.

In the Kiplinger survey, 79 percent of pre-retirees were concerned about Social Security’s financial strength, while 69 percent of retirees were concerned.

Medicare didn’t do much better, with 68 percent of pre-retirees doubting their financial strength and 62 percent of retirees doubting it.

Pre-Retired and Retired Financial Planning

Social Security only has one foot in the stool. Those who feel most optimistic about retirement have 401(k) plans and savings. But sometimes that plan doesn’t come together, resulting in people working longer hours.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. Epoch Times has no liability for the accuracy or timeliness of the information provided.

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