4 Daunting Facts About Your Retirement That You Need to Know

Everyone talks about retiring someday, dreaming about how it’s going to be.  No alarm clock, no schedule, no boss, no worries and not a care in the world.  To some this means golfing daily. For others it might include traveling, more time with grandchildren, volunteering, or taking on some new and distinctive responsibilities.  Yet there are some daunting facts that could plague your dreams and plans from actually becoming a reality.  And not being aware of these facts could turn your retirement into your most horrid nightmare.

Nobody wants to be the one to spread bad news, but love is tough and that means sharing these 4 Daunting Facts that could plague your retirement, obliterate your best intended plans and wipe out your future, is something I must do because I care.

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So here we go…

1. 7 out of 10 Americans will need some form of long term care in their retirement.[i]
   • The costs for that care will range from $178,000 to $350,000 per person.
   • That means, if you’re a couple, you will need at least an additional $528,000 (just figuring the lowest and highest number) saved up and allocated to long term care…before retirement in order to make sure you’ll make it.

2. 6 out of 10 Americans have less than $1,000 saved for retirement and 1 out of 5 have no savings at all.[ii]
   • This means that retirement will not be a dream fulfilled for them but a nightmare lived.

3. $10 in 1970 would purchase what $63 would purchase today.[iii]
   • That means you will have to earn a higher rate of return on your savings when you retire than when you are contributing to your retirement savings or you could run out of money.

4. Savings contributed by deferring taxes while you are working will cost you more in taxes once you retire than you ever saved by deferring your taxes.
   • If you paid 10% of your income into a deferred tax plan and your employer matched it 50% up to 4% of your income throughout the 40 years of your working career, then you will pay back more than 8 times the taxes during your retirement over what you saved in taxes by deferring them while you were working.

These daunting facts are real and not a figment of anybody’s imagination.  Unless you have better plans than relying on Social Security, IRAs, 401(k)s and Roths for retirement this should be your wakeup call.  Most Americans will receive less than $32,000 a year from social security in retirement.  But don’t count on using all that money to fulfil your retirement dreams because social security IS taxable, thanks to Al Gore’s tie-breaking vote on August 7, 1993.  And though many are expecting to be in a lower tax bracket in retirement, than when they were working, that presupposition has not panned out in the retirement of most Americans.

Knowing the daunting facts that could turn your retirement into a nightmare do you absolutely no good unless you act upon the knowledge to which you are now privy.  There are specific and guaranteed practices that will not only allow you to dream but will sanction those dreams by enabling you to fulfill them.

And here they are:

1. Have enough saved so that you can leverage your savings and fulfill your dreams, letting dividends pay the interest on your loans during your retirement.
2. This will require you to save more. 10% is a good starting place but learning to leverage your savings so that you can recover the cost of the acquisitions in your life will become necessary if you are going to overcome inflation and really be able to fulfill your retirement dreams.
3. Avoid deferring taxes during your working career as you will pay more later than if you simply pay the taxes you owe today. There is no way to avoid taxation legally.
4. If you don’t have over $500,000 laying around that you don’t really need or want, then you are going to need long-term care insurance. That insurance should come with a fixed premium so that the cost of long-term care won’t destroy you and your retirement dreams.

Of course as more and more Americans are starting to realized, all of these daunting facts can be addressed and eliminated, not through speculation, but with the purchase of very specific types of Whole Life insurance.  In fact, Whole life insurance provides the only real solution to many retirement issues, not only these daunting four, because the proper kind of life insurance delivers for you during your lifetime as well as after you die.

Find out today why more and more Americans are looking to life insurance to assure themselves that they will be able to fulfill their retirement dreams and not be cut short because of money issues.  Call 702-660-7000 now.

Dr. Tomas P. McFie

Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here. 

[i] PBS Newshour: Americans Seriously Unprepared for Long-Term Care, Jason Kane April 24, 2013

[ii] GAO analysis of 2013 Survey of Consumer Finances

[iii] CPI Calculator