Making sure you have enough money in retirement is a huge challenge these days, especially with people living longer.
Research from the nonprofit, Transamerica Center for Retirement Studies, shows:
- 45% of baby boomers expect to experience a reduced standard of living in retirement.
- 83% of gen-Xers anticipate that they’ll have an even harder time achieving financial security than their parents.
- Just 18% of millennials foresee a bright future in retirement.
“Sadly, those results aren’t surprising, because we often hear from people who have real concerns about outliving their money,â€ says investment adviser Joshua Mellberg, the founder of J.D. Mellberg Financial. “A lot of this is because so many aspects related to a traditional retirement have changed. For one, people are living longer, which means they need either to save more money, and find ways to make what they have saved last.â€
The fact that defined benefits or company pensions sounds like folklore–a tale of generations–is causing today’s workers anguish, in addition to skepticism about the state of Social Security. But, Mellberg believes those planning for retirement should concentrate on trying to control the things that they can.
Mellberg shared what he sees as three habits that successful retirees often display worth imitating with Black Enterprise:
1. They Live With Some Urgency
Successful retirees seize each and every day, to stay healthy and happy. You can apply this to all aspects of your life; from what you do during retirement, to the way you save money throughout your working life.
“A sense of urgency can call you to action, so you’re more likely to prepare for a great retirement,â€ Mellberg says.
2. They Aren’t Afraid to Take Risks
“You also don’t always want to live your life on the safe and boring side,â€ advises Mellberg.
One way some retirees minimize their financial risk, is using a portion of their savings to purchase an annuity, which provides them a set amount of income for life–much like a pension.
“Once you know your retirement income is in order, you can be free to take some risks in other areas of your life, and pursue your lifestyle goals,â€ Mellberg says.
3. They Retire Based on Assets, Not Age
Traditionally, when people think about retirement, they pick a target age, rather than a target amount in their portfolio. However, that may not be the right approach.
“While you might have a certain age in mind, it can be more worthwhile to create a retirement plan that’s based on your finances,â€ Mellberg explains. “That will give you a much better chance of having enough money to last the rest of your life.â€
Anyone nearing retirement needs to understand that there are steps that can be taken to help put them in a more secure position financially, so that they can thrive–not just survive. “Retirement is supposed to be about enjoying yourself after a lifetime of work, not counting pennies, as you try to survive,â€ Mellberg adds.