Why It's Important to Invest in Your Retirement
Investing for retirement may be the most important financial effort that most of us will undertake. Down the road a few years, people will probably have to rely more on their own finances and less on the government than previous generations. That makes planning for retirement more important than ever.
Why is this so?
People are living longer than ever.
- Today, the average 65-year-old man can expect to live for 16 more years, while the average 65-year-old woman can look forward to 19 more years.1 And many people live much longer than average! If you retire at age 65, you could spend 20 or 30 years in retirement.
Social Security won't be enough.
- Today, the average Social Security benefit is only about $12,000 a year — hardly enough for most people to live on.2
- The average age for collecting full benefits is gradually increasing. For those born after 1942, full retirement benefits will not kick in until age 66 or later.
- The laws governing Social Security have changed in the past, and they will likely do so in the future — especially when you consider that payroll taxes collected are projected to provide for just 74 percent of the promised benefits by 2040.
You will likely be expected to pay a larger portion of your health care costs in the future — and they're getting more expensive all the time.
- Some experts believe that a retired couple who live into their 80s may need $300,000 just to pay for health care (not counting everyday living expenses).
- Medicare may help, but it probably won't meet all your health care needs. Because larger numbers of people are approaching or are in retirement, Medicare is predicted to deplete its assets in 2018.3
1Source: National Center for Health Statistics.
2Source: Social Security Administration, Monthly Statistical Snapshot, April 2006.
3Source: Social Security Administration, May 2006.