 If you're a part of Generation X (Gen X), you probably turned 16 around 1986 and most 16 year olds in NC during that time had a driver's license. That's probably when most Gen X'ers began to notice gas prices because the first time they ever asked to drive the family car, the standard reply from most parents (who trusted their kids) was, "If you take the car, put gas in it before you come home." Regular gas in 1986 was $0.93 a gallon.
Gen X'ers left home and entered the workforce sometime during 1990 - 1995 and began new chapters in life as "responsible" adults. In 1995 regular gas was $1.26 a gallon and the average life expectancy for Gen X'ers was 75 years.
Retirement will be another milestone for Gen X'ers. Retirement used to be a time when one could depend on a pension check and a social security check. Most often the pension and social security checks were approximately equal to the salary one earned as an employee. If that was the case the newly turned 65 year old usually opted to quit work, voluntarily, and settled into retirement. A pre-boomer retiree could probably afford to pay bills, travel and enjoy the grandkids without much financial strain or stress. However the picture of retirement is changing and Gen X will be the among the first to experience the New Retirement.
The current controversy regarding retirement and Gen X'ers questions whether or not Gen X'ers will have to work during retirement as the cost of living will continue to increase thanks to inflation. And social security may not be an option. Also, most employers terminated most pension plans and saving for retirement is mostly a Gen X'ers responsibility. A Gen X'er is also expected to live to be at least 100 years old! It may seem to most that retirement will be unaffordable and working through your golden years will be required, however that doesn't have to be the case. Working Gen X'ers have the power to decide whether or not work will be voluntary or mandatory.
What can you do right now to prepare for a voluntary and affordable retirement? Start by asking yourself the following questions: - How much will I need? The most obvious question is often the question that's most often overlooked. When deciding how much money you will need for retirement look at how much you currently earn and how much you currently spend. For example, if you earn an annual income of $30,000 then it's probably a good idea to plan on an annual income of $30,000 in retirement. Some professionals suggest planning to live off of 80% of your current income, which in this case will be $24,000. There is no guarantee that your expenses will decrease in retirement. So you'll also need to consider if you'll be able to live off less and maintain your current lifestyle? Your answer to this question is extremely important. Remember, your goal is to make work optional, not mandatory.
- How long will I need it? Anyone starting to plan for retirement should plan to support themselves for at least 30 years, and that's the absolute minimum. So if you consider an annual income of $30,000 for 30 years, then the approximate amount of money a Gen X'er will need to voluntarily retire at 65 is close to $1,000,000 (yes, that's a million dollars!).
- Am I saving enough to enjoy a voluntary retirement? For some reason basic necessities are never free. Food, shelter and clothes will always have some kind of cost associated with them and the price you pay today may not be the price you pay in the future. So, if you earn $30,000 a year (which is roughly $2,500 gross income each month) are you saving enough to provide $2,500 in monthly future income?
Your 401(k) Will Not Be Enough It's easy to assume that if you put money in your employer's retirement plan [usually a 401(k)] then you'll have enough to retire. However that's not true. A study conducted by Retirement USA found that Americans from ages 32 to 64 are going to face a staggering retirement savings shortfall of $6.6 trillion. And, according to Forbes.com, employers privately revealed that their 401(k) plans were not sufficient to provide for worker's retirement. Based on these facts you need to find alternatives to protect yourself from a bleak future of relying on either your children or social services. My Advice Start paying attention to your household income and expenses. Are there any cost savings that you can apply to your household budget? Or do you have an opportunity to earn more income? Planning for retirement is a process and there are lots of ways to start today. If you're unsure about how to get started, call me at (336) 808.3496 or send me an email. I can help structure a retirement savings plan that will work specifically for you. Make a conscious decision today to take charge of your retirement picture. |
