I begin with a stout WARNING: Your financial well-being in retirement involves much more than the size of your 401(k) or your Social Security or your pension (if you’re lucky enough to have one). Many experts have labeled the current state of retirement in America as the “Retirement Cliff.” And they say it was brought about by several factors, including the massive numbers of baby boomers retiring in the next fifteen years, the shift from traditional pensions over to 401(k) type plans that began in the 1980s, minuscule retirement savings, increasing debt and a lack of adequate financial knowledge.
Plain and simple, for many Americans today, financial planning for retirement requires improvement. Many Americans today attribute their inaction directly to a lack of time, believing that the pace of society makes it harder for them to think about retirement and stick to long-term goals. And, believing they are too busy even to think about long-term goals, may be one of the reasons why half of all Americans have no financial plan in place for retirement.
The retirement cliff is an unsettling reality facing millions and it demands that people prepare for retirement in a complete different way.
The Retirement Red Zone
This is especially true for those in the retirement “Red Zone,” which is a ten-year period of time beginning five years before you retire and ending five years into retirement. This ten-year red zone is so important because the decisions you make during this period regarding your retirement might be the most critical decisions you’ll ever make. One of the problems people face in the Red Zone is the issue of planning for increasing life expectancies, meaning the nest eggs that retirees accumulate before retirement will have to last longer during retirement.
The Three Stages of Retirement
In the past, retirement was often referred to as one long stretch of time in which people planned to enjoy their golden years comprised of vacation and fun with the grandchildren, possibly with some long term care included. Well, times have certainly changed. Today, retirement basically has three phases that need to be carefully planned for. These phases are:
- Early
- Comfortable
- Final
The early stage usually occurs during the first years of retirement. Many individuals have stopped working at an early age (some as early as their 50s) and are full of energy and enthusiasm. In this first phase, many retirees travel extensively and enjoy physical sports such as golf or tennis. They may continue to work on a part-time basis or serve on various boards of trustees for different organizations.
The second stage, comfortable, is basically the middle of the retirement cycle, when many individuals stay closer to home. They may be more tired and do not want the hassle or headaches associated with travel. They are still in relatively good health and often participate more in local events and choose less physically taxing hobbies.
The last years of retirement make up the final stage. This is when individuals may battle the physical and mental aspects of old age. In this final phase, retirees often move out of their homes into assisted care facilities or nursing homes. Medical expenses, including prescription drugs, take up a significant share of their monthly income. By Stephen Geist
Submitted February 02, 2017 at 06:09PM by TheRetirementGuy http://ift.tt/2jIS3x9
