My Comments: I define retirement as the point in time when you quit working for money and money starts working for you. The pandemic and the resulting economic chaos will manifest itself in many ways when it comes to retirement.

For those of you still working, it may simply be the realization no one is going to suddenly show up at your front door with a bucket of money to make sure you can pay your bills as your life plays out.

I have no idea where you are in life’s scheme of things. Whether you’re already retired, or plan to retire in ten years, or if it’s many years away, I suggest it needs to become closer to the surface of your brain.

For better or worse, we live in a free market capitalist society where if you can’t get it done by yourself, you’re essentially out of luck. Yes, there are helping hands, but they get ridiculed as being “socialist” until such time as you need those helping hands.

The headline of the following article reads as follows: Retirees Have Shockingly Little Retirement Savings, Data Shows. Roughly 85 years ago, leadership in this country created the Social Security System, designed as a safety net so that people didn’t just die in the streets as they got older.

Today, Social Security is a fundamental financial lifeline for tens of millions of Americans. Without it, our economy will collapse and people will die in the streets.  And yet there are those who want it to go away. Personally, I know I rely on it far too heavily as my monthly stipend is critical to my well being. And I’m not alone, not by a long shot.

So, for each of you reading this, “Where does it fit into your plans for the future?”.  My efforts these days is to promote my book and online course under the title, The Dynamics of Retirement. It’s a transformative way for people to get their head around how much money they’ll need for retirement. The chapters cause someone to create a personal financial road map to follow that increases their chances of a successful, worry free retirement.

by Maurie Backman \ 6 SEP 2020 \ https://tinyurl.com/y2son79b

Social Security pays the average senior today about $1,500 a month, or $18,000 a year. That’s a nice chunk of money to supplement outside income sources, but it’s certainly not enough to live comfortably on.

Yet many seniors risk having to do just that, and the reason boils down to not having enough retirement savings. Today’s retirees have a median $45,000 in savings, reports Transamerica, and that excludes home equity. And while the latter can serve as a retirement income source of sorts, it can’t take the place of a robust IRA or 401(k).

If you’re approaching retirement and are looking at savings in the ballpark of $45,000, consider this a wakeup call that you’re not ready to stop working just yet. If you do, you might really set yourself up for long-term financial struggles.

You need healthy savings to get by

There’s no single savings number that will guarantee you financial security during retirement. Some seniors can kick off their golden years with $100,000 in savings and do just fine, while others can retire with $1 million and still struggle. But as a general rule, it’s a good idea to close out your career with around 10 times your ending salary socked away for the future. If your savings balance is closer to $45,000, it means you’re probably nowhere close.

What should you do in that scenario? For one thing, push yourself to work longer. Doing so will allow you to both accumulate additional savings while simultaneously leaving your existing savings alone. If you’re 65 and ready to retire, but you instead work until 70, all the while contributing $500 a month to a retirement plan and investing it at a conservative average annual 5% return, you’ll add over $33,000 to your nest egg.

Another tactic to employ in this scenario is to delay your Social Security filing until you turn 70. You’re entitled to your full monthly benefit at either age 66, 67, or somewhere in between, depending on your year of birth. But for each year you delay past that point, your benefits increase by 8%, up until age 70. And to be clear, that increase is permanent.

Will $45,000 in savings carry you through retirement?

Financial experts have long supported a 4% annual withdrawal rate from savings. For $45,000 in savings, that means $1,800 in annual income. Combine that with $18,000 a year from Social Security like today’s average senior collects, and it’s still not a lot to live on.

If you’re not yet retired and don’t have much savings, it definitely pays to boost your nest egg as much as you can while also delaying your Social Security filing to increase your benefits. But even that may not be enough. You might still have to think about getting a part-time job as a senior, renting out a portion of your home, or employing other creative measures to ensure that you’re able to make ends meet. Either way, the key is to be realistic about your retirement income needs — and not go into your senior years assuming you’ll be just fine with $45,000 to your name.