The recently-released 12th annual retirement survey by the Transamerica Center concluded from their questioning that Americans are largely unprepared for retirement and few have a backup plan if they are forced into early retirement. Specifically, they found that 44% of workers have no strategy to retire and 39% of Americans expect to work until age 70 or longer. The number one reason cited to work that long was, “Necessity – because they won’t have enough money to retire.” This is disappointing to the financial planning community because after age 50, many people can find themselves out of work and unable to re-enter the workforce at anywhere near their old salary. Plus, after age 55, health issues increasingly prevent workers from full-time employment; the older you become the more uncertainty there is around your career trajectory.
I believe that this survey is revealing the continuing general weakness of the U.S. economy that has been accumulating over the last 5 years with the unemployed, underemployed, and low-interest rates on savings and bonds. Plus there are more financial landmines than normal: pay cuts or zero salary increases are common; companies, universities, and local governments are cutting employees from full-time to part-time to avoid Obamacare; no one knows what medical and health insurance costs are going to do over the next 3 years; and the economies of developing countries are not strong enough to pull the U.S. economy up with exports to them.
In my experience, a comfortable retirement is increasingly reserved only for people who are financially literate. A comfortable retirement before age 60 is only possible with diligent financial literacy. And if you are behind in retirement savings or unemployed, then it is critical to become financial literate and execute offensive strategies that do not rely on an employer. If you want to avoid becoming a retiree with financial difficulties, then raising your level of financial literacy is your best tool to make that happen.