Even a Millionaire Might Have to Work in Retirement
Remember growing up thinking that a million dollars sounded like a lot of money? Then, you started working your first minimum-wage job and realized “millionaire” might never be a title you wear. Today, a child or adult might be surprised to hear that a million dollars isn’t a sufficient retirement fund, but statistics are showing this to be true. Being that only seven percent of Americans have a million dollars or more, retirement appears dire for the rest of us.
Times are Changing
Inflation is, of course, a major player in the devaluing of a million bucks. One million just doesn’t go as far as it used to. In fact, in 1953, about the time the current wave of retirees set out to become millionaires, one million dollars would have bought what 8.7 million will today. Add to inflation, longer lifespans and the lower investment yields of recent years, and you have a generation of retirees that are running low on funds. Today, a 65-year-old couple pulling $40,000 (the recommended 4%) a year from their million dollar retirement nest egg has a 72% chance of running dry before they die.
Cost of Retirement Today
Most financial advisors recommend retiring on a minimum of 70 to 80 percent of our pre-retirement annual income. The current median household income in the United States is $50,000, which means to retire comfortably today, the average American needs at least $40,000 per year to live on. With a life expectancy of 84 and 86 for men and women respectively and given the rise in inflation, one can see how retirement costs could easily surpass a total of one million dollars, or even two. In fact, it is estimated by the Social Security Administration that one in ten seniors age 65 today will live past the age of 95.
Postponing Social Security
Whether or not you believe Social Security will be around for your retirement, most financial planners recommend not factoring it into your retirement savings plan. If you choose to hope for it, know that currently, the average Social Security benefits are about $14,760 per year, about 30% percent of your needed funds. Furthermore, benefits are expected to decrease at least 25% by 2036. Many seniors today, however, are increasing their benefits eight percent each year by postponing them from age 65 to 70.
Working in Retirement
It sounds like an oxymoron, but more retirees are choosing to continue work after retirement. Whether it’s staying at the same job with a more relaxed schedule or starting an entirely new career, about 18.5% of retirement-age Americans are still working. In fact, over half a million Americans over age 50 are full or part-time students pursuing both undergraduate and graduate degrees. A return to school can help you transition into a job that would be more practical to continue into your golden years.
If you can’t imagine staying at your current job after age 65, consider how you would enjoy working some of these “post-retirement” jobs:
- Senior Care
- Real Estate Sales
- Tax Preparer
- Business Consulting
- Tour or Museum Guide
Many seniors are finding ways to turn their hobbies into sources of income. Selling crafts, upcycling furniture, handyman services and dog walking can be enjoyable ways to supplement your retirement funds.
Since travel is often a dream of retirees, finding work in the travel industry is a great way to fund both your retirement and your vacations. Many cruise lines actively recruit seniors. There are also airline reservationists which work from home and receive flight benefits. Tourist areas which have an influx of snowbirds also need an influx of seasonal employees, making them a great place to find work.
As a kid, you may have dreamed of reaching a million dollars so you could retire at a young age. If you’re still relatively young and want that dream to stay alive, you’ll need to find ways of more than tripling that million. If you’re close to retirement age and haven’t realized those financial dreams, just keep in mind that there are rich, miserable seniors bored out of their minds. In other words, money isn’t everything, especially as it relates to a quality retirement. While it’s strange to think that even a millionaire might still be working at age 70, there are many ways you can continue working and still enjoy your retirement years.