Ready or Not, Here Comes Retirement

In 2012, the National Center for Health Statistics, a division of the CDC, published its National Vital Statistics Report. I was interested to learn about the chapter called, “Deaths: Final Data for 2012”. Catchy chapter title eh? Anyhow, these fine folks at the NCHS have calculated the average age of American deaths for the past 30 years or more, so although it’s a morbid piece of research, it provides Americans with mortality data to chew on.

Okay, the good news: there is an upward trend in mortality rates. From 1970, (71) years old, to today’s (79) years old, we have increased the average American’s life expectancy by eight years, or 10%! See what happens when Americans take a stand against John Travolta’s disco-slinking “Staying Alive” lifestyle, or Leatherface’s chainsaw wielding exploits from “Texas Chainsaw Massacre”? WE LIVE LONGER!

So, I am sure by now, you are wondering why I am blathering away about life expectancy stats. Because, without them, I can’t wrap my head around the recent findings from Ipsos Public Affairs’ recent study, Financial Luster in the Golden Years?

Overall, the results from our eNation survey conducted in September 2014 show that the average age that working Americans plan to retire is 64 years old. But that age increases to 66 years old when asked when they think they will realistically be able to retire. Plus, the percentage of those who will never be able to retire went up dramatically from 7% to 13%, while those who said they want to continue working as long as possible went down when comparing “hope to retire” versus “realistically think they will retire”.

Ipsos Retirement Infographic

To download this infographic: Ipsos Retirement Infographic

How much do I need to save dad? Well, for a 65 year old to be able to afford 25 years of retirement, the rule of thumb goes that they will need to have anywhere from 8 to 11 times their current salary tucked away. When asked, a large chunk of Americans (53%) were correct in this ballpark, saying either 8, 10 or 12 times their current salary would be needed to retire at 65 years old and live till 90. And another quarter (25%) of Americans said 14 times or more would be necessary for retirement. Now that’s a responsible bunch! But on the flip side, approximately one-fifth (22%) underestimated retirement costs and thought the amount needed to be five times or less their current salary.

It seems as if we are working more and more, and retiring less and less. So, what did we learn today?

Recap on life expectancy rates

World Health Organization 2014 rankings are in, and with a little rounding up, here is a snapshot of the results:

  • Monaco ranks 1st in life expectancy at 88 years old.
    • This puts my heart to rest. If it was Greenland, I would be skeptical of the study. Now, I can simply be foot fancy on my yacht, and watch the Grand Prix of Monte Carlo till death sets in.
  • Our neighbors to the north, Canada, rank 12th at 83 years old.
    • This is good news for me as well, since I love hockey, Canadian-style lacrosse, Wayne’s World, Nunavut State Park, Old Quebec City, and “Jack Astor’s”.
  • US ranks 34th at 79 years old.

Recap on financial planning advice from a non-licensed financial planner (namely me)

o   You need to plan for the future.
o   You need to have 8-10-12 times current salary set aside to retire.
o   Be realistic about what is needed at the end of your work life.
o   20% of Americans don’t believe they can retire until the age of 70 or older.

That last point (20%) is important, because it only leaves us a decade of decadence, charitable giving, bucket list bonanzas, and lots of time to drive our grandchildren to school and extra-curricular activities, while Millennial moms and dads work all day/night in the hopes of retiring at 80 when their turn comes along!