April 15, 2016
Planning for retirement can lead Missourians to a financially secure future
Forty percent of baby boomers have nothing saved for retirement
Jefferson City, Mo – Retirement may seem distant but the sooner Missourians start saving the more financially secure they will be during their golden years. The Missouri Department of Insurance encourages individuals to begin planning now during National Retirement Planning Week.
“It is estimated that a 65-year-old retiring today would need more than $1 million of investable assets in addition to Social Security income to sustain themselves through the age of 95,” Director of the Missouri Department of Insurance John M. Huff said. “Increased longevity also means planning for retirement so seniors can live securely well after leaving the workforce."
To be financially comfortable in later years, individuals must take on the responsibility to save and plan for their financial future while teaching younger generations healthy financial practices. The sooner Missourians learn healthy financial habits, the more inclined they will be to use such habits later in life.
The National Retirement Planning Coalition, led by the Insured Retirement Institute (IRI), is a group of prominent education, consumer advocacy and services organizations that put on National Retirement Planning Week to encourage Americans to plan for their future financial retirement needs.
With 69 percent of baby boomers having no defined benefit pension plan, many might find themselves in a position where they do not have enough saved. IRI says there is a way to close the income gap.
- Increasing contributions to retirement savings for those 50 and older can add up to an additional $6,000 per year to workplace retirement plans. Even assuming current contribution limits do not increase, if these “catch up” contributions are made from age 50 to 70 and realize an average 5.5 percent pre-tax investment return, they will add over $239,000 to retirement savings.
- Maintain the best health possible. While living healthy could mean a longer lifespan, it also could mean a lower consumption of medical care on an annual basis. Stopping unhealthy habits, such as smoking, and maintaining a healthy diet and regular exercise may lower the risk of needing chronic care, and therefore lower annual expenses for health care. A healthy lifestyle can also provide a higher quality of life in retirement.
- Consider delaying retirement until age 70. Social security benefits are 32 percent more than the payment received if benefits start at age 66. Regardless of life span, later retirement will give individuals more time to build up a retirement savings and five fewer years when savings will be needed.