[Editor's note: The following is a guest post from an affiliate of ForexTraders.com.]
Retirement has become the latest “dirty” three-syllable word in our daily lexicon, much to the chagrin of our Baby-Boomer generation. Responsible for building much of our consumer-driven economy over the past several decades, this large sector of our population is staring at the possibility of retirement, and then promptly walking in the opposite direction. 401-K plans have been depleted. Home equity, once a flourishing wealth accumulation tool, is now nonexistent without positive prospects for years to come, and the clock continues to tick down.
The good news is that we are living longer due to healthier diets and improved lifestyles. However, the offset is that working, whether part or full-time, may be a necessary component of any attempt to retire with dignity and achieve some semblance of financial security. Even though stocks have appreciated nicely over the past nine months, many consumers withdrew their equity positions during the last crash, never to return again. Political attacks on Medicare and Medicaid programs have also been ramped up, and these heated discussions do not augur well for the future either.
It is a cruel twist of fate that the generation of the “Sixties” that espoused freedom and expanded consciousness must now learn lessons on frugality and how to stretch a dollar for all it is worth. This lesson, however, does not apply to this single group in our society. The Employee Benefits Research Institute recently released a survey on retirement confidence in America. Over half of the respondents revealed that the total value of their investments and savings, after deducting net home equity values and company defined benefit programs, was less than $25,000. This statistic on household wealth accumulation is even more startling when you accept that 27% of all existing residential home mortgages are under water.
After factoring in the level of unemployment, the effect of rising oil prices, and inflation for basic living expenses, times are truly tougher this time around than in any previously experienced business downturn. Frugal living and prudent investing have never been more important to address current, as well as long-term, needs. Getting rich quick in the lottery is not the answer, nor is joining a fast track trading community of options or
forex traders. One can easily find a competent forex broker, but it takes years to develop the skills and experience necessary to record consistent gains in a high-risk trading medium.
Much of the doom and gloom surrounding this topic has been amplified by the talking heads on cable television. Previous generations, faced with the same retirement issues, have gotten creative and developed workable solutions. Many have continued working in some capacity, especially in a consulting capacity if their skill sets remain in demand. For individuals that have worked for forty-five years, the immediate transition to a different lifestyle, where business relationships and work-related challenges no longer exist, can be frightening and down right bad for one’s mental and physical health.
Many of the traditional retirement rules that we have heard during our entire working careers will also need to be modified. Will we actually need less after we retire but continue working? The accepted rule of a 30% reduction may no longer hold, since it was based on less working related expenses and a lower tax bracket. Since we will be living longer, we will also need to continue saving for the future in any event.
Retirement planning may require more thinking outside of the box going forward to find an acceptable solution for the challenges of today, but a challenge is just another word for opportunity.
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