There are simple facts about our economy that we ignore on a constant basis when planning for retirement. Our population is aging and growing at the same time, and even though we had a large young workforce that supported the generation before it, this will no longer be the case. There’s been a lot more pressure and responsibility placed on the shoulders of the individual retiree, but many neglect this fact until it’s too late. It’s essential that we as a culture realize the pitfalls of saving for retirement in an economy that no longer has the social resources of days long past:
Lack Of Diversity
It’s not uncommon for people to expect that Social Security and their retirement savings is going to take care of them for the long-haul. This common misconception leads to an unfortunate lack of diversity in investment. You shouldn’t be putting your money in just one basket. Spreading your holdings out over multiple investment vehicles like 401k’s, IRA’s, Mutual Funds, and Treasury Bonds is the best approach. If you’re not familiar with the stock market, there are always investment professionals that can assist you in achieving your long-term saving strategy. If you do know the ins and outs of the market, use online tools or your 4G Android to keep up with current market developments so you can adjust your investments as needed.
People are living longer, a lot longer. Advances in medial technology and an increased understanding of health and well being have increased our lifespans by decades. According to an article on MSN, financial planners would usually create retirement plans that stopped at age 85. This was, at the time, considered the maximum life expectancy of the average person. However, few people made it to this age and the usual lifespan was far less, and statistically, leveled off around age 65. The truth of the matter is that it’s not unheard of for people to live up to or past age 90. Simple investments and social security will not cover the average person as they get older. The costs of living increase dramatically due to medical and pharmaceutical costs. That’s why people need to diversify their investment strategies as early as possible and tap into IRA, 401(k), and extended care programs to maintain a standard of living for the later years.
Assuming Long-Term Health
Though the average allowable work age has increased over the years and people can work much longer than the previously could, assuming that you’ll be able to work as long as you want is a big mistake. Not everyone has the same longevity and putting off investing for retirement is a really common mistake. The likelihood is quite high that as you get older, your chances of developing some type of disability. This is never planned for and individuals that one day find themselves in this situation are often caught unprepared. There are insurance plans that can help cover the costs of such a situation. You should consider looking into making such an investment so you’re not caught unprepared when you find out that you’re not able to work as long as you would have liked to.
Probably the biggest mistake anyone can make is not acting. Waiting too long to do anything is just as bad as not doing anything at all. Our inadequate financial infrastructure simply can’t support our growing population at a sustainable rate. It’s up to you, the consumer, to plan for your future because, if you don’t, you might be faced with some hard financial decision later on that you could have avoided altogether.
Guest Post by Jessica