52% of American households are at risk of not being able to maintain their standard of living in retirement – even when factoring in potential proceeds of a reverse mortgage.
That’s according to the Center for Retirement Research at Boston College.
Let’s take a look at three critical reasons for that… and what you must do now to protect yourself…
Problem #1: People continue to live longer, but aren’t working longer
According to the Social Security Administration, 25% of people turning 65 today will live past 90, and one out of ten will live past 95, yet most financial planners base their projections of how much money you’ll need on your living to age 85 or so.
What if you’re one of the lucky ones who hangs on until 100 or longer? And just how “lucky” will you feel if you can’t provide for yourself during those final years?
Solution: Assume you’ll live to at last age 100 when determining how long your money will need to last you.
Problem #2: Underestimating health-care and long-term care costs in retirement
The numbers are shocking, and almost no one is accurately accounting for this: A 65-year-old couple retiring now will need $245,000 just to cover out-of-pocket health-care costs during retirement, PLUS another $255,000 to cover one average stay for one person in a nursing home.
Whoa! That’s half a million dollars you’ll need just for medical care… but most people close to retirement don’t even have that much in total retirement savings. [Read more…]