Many current retirees, as well as those who are currently working, believe that coming generations could be worse off in retirement than we are today, according to a recent report from the insurance company Aegon. Since many people spend 20 years or more in retirement, these findings show how important it is for individuals to financially prepare for retirement, and also suggest some ways to improve the retirement experience for generations to come. Here is how retirement will be different for future generations.
An Aging Population
The biggest trend affecting retirement is the aging population. In 1950, there were 205 million people over age 60. In 2017, there were almost 1 billion people age 60 and older, nearly a five-fold increase. By 2050 it’s estimated the group will comprise 2.1 billion people, according to United Nations projections. The sheer number of retirees will strain the ability of employers and governments to provide sufficient financial and medical benefits.
[See: 10 Retirement Rites of Passage.]
Lost Faith in Government
About half of those surveyed by Aegon believe future retirees will be worse off in retirement than their parents. Over 90 percent of workers and retirees say that governments must do something to address the cost of Social Security. Meanwhile, barely 40 percent of workers have an employer that contributes to their retirement plan, and less than 40 percent are consistently saving for retirement on their own.
Work Until You Drop
Over half of current employees envision a transition into retirement that includes continuing to work a full-time or part-time schedule. Many people say they want to keep working in retirement, not only for the money, but for the experience. However, the reality is that many people will need the money. On average, the Aegon survey respondents estimate they’ll need 68 percent of their current annual income to finance a comfortable retirement, but only a quarter of those surveyed believe they will be able to achieve that level of income.
[See: 15 In-Demand Jobs for Seniors.]
Don’t Know How to Invest
The era of the company pension is slowly fading. More retirees must prepare for their retirement years on their own. Yet only 30 percent of current and future retirees have demonstrated sufficient financial knowledge to make informed decisions about saving and investing for retirement.
Health Care Concerns
Half of those surveyed say that declining health is a major concern for retirement. Many people worry that they will not be able to remain active in retirement, and are particularly concerned about developing some form of dementia. Over a third of current retirees say they had to retire sooner than planned, and the number one reason was health problems. But less than half of people say they have taken the cost of health care into account in making plans for financing retirement.
Longer Life Expectancy
Modern medicine has extended our life expectancy. Yet, while most people consider themselves to be in good or excellent health, many fail to take the necessary steps to maintain their health. There is a correlation between workers who pay attention to their health and how prepared they are for retirement. People who eat well, exercise regularly, have routine medical checkups and avoid stress and harmful behaviors like smoking or drinking too much are found to be more prepared for retirement, and not just physically. They are likely to be in better financial shape as well, Aegon found.
Staying in Your Own Home
Some 70 percent of people want to stay in their own home in retirement, according to the Aegon survey. And remaining at home is likely to be possible for most retirees if they make a few minor home renovations. The most important accommodations are making age-related modifications in the bathroom, installing home security systems, bringing in age-friendly furniture and making sure there is ready access to emergency services.
[See: The 10 Best Places to Retire With Affordable Housing.]
A New Social Contract
The current retirement system has not adapted to our changing times. Recommendations for improvement include strengthening Social Security, creating universal access to retirement savings programs, providing affordable health care and improving financial education. Employers could offer more flexible retirement programs which provide for longer working lives. Perhaps most important of all, older people need vibrant communities that allow people to age in place and celebrate the value of older individuals.
Tom Sightings is the author of “You Only Retire Once” and blogs at Sightings at 60.
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How Your Retirement Will Be Different From Your Parents’ originally appeared on usnews.com
