Think you've got your retirement plans all put to bed? Not so fast. This piece from Money Central says that there are four retirement blind spots that could derail your plans. Their list:
Blind spot #1: I can work until I'm 70 or older.
Facts: You may not be able physically to work as long as you'd like. The number of disability claims rises sharply as people age. Data from the Social Security Administration indicates that 63% of disability claims were filed by those 50 and over.
I'm not basing my financial future on the fact that I HAVE to work until 70, but I would like to. I think there are a lot of benefits to working later -- and not all of them are just financial.
Blind spot #2: I can count on Social Security
Facts: The trouble is that, between rising Medicare premiums and taxes on benefits, those of us retiring in, say, 25 or 30 years will see a drastic cut in the after-tax value of Social Security benefits, according to a study by the CRR.
I'm planning on zero from Social Security. Then, if I get anything, it will simply be a windfall for me. Of course, this irks me to no end -- knowing I'm contributing to something every paycheck that I'll likely see a fraction of at best -- but last I checked, this program isn't voluntary according to the government. ;-)
Blind spot #3: I'm saving for a better future.
Facts: One of the biggest flaws in most people's plans is the vague notion that somehow retirement includes a lifestyle upgrade. Sorry. Unless you're starting very young, or saving more than 15% of your income, you'll be doing well to have more or less the same income, purchasing power and standard of living in retirement that you have right now.
I think by now the notion of spending retirement traveling 11 months of the year or moving to a beach resort community has been replaced in the minds of most people -- replaced with the fear of "Good grief -- am I going to be able to save enough???!!" And there's good reason for this. Most people aren't saving enough and too much time has passed. They will either need to reduce their lifestyle dramatically or work later into life -- if they can.
Blind spot #4: Thank goodness for my inheritance.
Facts: The odds are against you. According to the authors' calculations, only 1.6% of heirs will get $100,000 or more.
Again, I'm counting on nothing here. In fact, as I've said before, my parents will likely use up their meager retirement funds and need me to support them in part later in life (something that I'm willing and able to do), so there's no inheritance. And why should there be? They gave me enough advantages -- like a great family, education, and wisdom -- that I've been able to do well on my own and don't need a windfall from them.
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