Straight talk on retirement planning

Retirement Security Week

GOLDEN VALLEY, Minn. - When it comes to retirement planning, a lot has changed since many of our parents and grandparents retired. Financial professional Justin Halverson with Great Waters Financial joined the KARE 11 News at 4 to explain why retirement planning has changed and and what you should be doing to prepare.

Q: Has retirement planning really changed since Grandma and Grandpa or even Mom and Dad retired?

  • Yes! For starters, the Recession of 2008 has changed things for multiple generations. In the last half of that year, the nation’s 401(k)s and IRAs lost $2.4 trillion. (Source if you choose to use stat: The Atlantic)
  • And because of the Recession, Millennials aren’t getting as high of paying jobs out of college. Many are scared of the stock market, which is impacting their savings.
  • But there are several other factors that have significantly changed planning for retirement.

Q: Tell us about those changes...

1. No Safety Net

  • In the past, Social Security and pension plans accounted for most of a person's retirement income. But, the same can’t be said today.
  • Today the average retiree gets 27% of their income from Social Security. In 1985, that number was 65%! (Source if you choose to use stat: MarketWatch)
  • Nowadays, pension plans are disappearing, with only  19% of companies even offering one. (Source if you choose to use stat: MarketWatch)
  • That’s why it’s so important for workers to take control of their retirement savings by investing in a retirement plan like a 401(k), IRA or Roth IRA. I recommend my clients save 10-15% of their salary in their retirement accounts.

2. The Extra Decade

  • In 1985, men were expected to live 14 years after retiring; women, 19 years. Today, men are expected to live 26 years in retirement and women 29 years. (Source if you choose to use stat: MarketWatch)
  • That means that people now have to plan for an entire decade or more of retirement that the older generation didn’t have to.
  • And with the average retired household spending more than $40,000 a year, that can really add up. (Source if you choose to use stat: U.S. News and World Report)
  • I tell my clients to start early. I have a great resource on my website, It’s retirement calculator and can help you determine how much you need to save to meet your retirement goals.

3. The Single Factor

  • Many people are retiring unmarried. In fact, marriage rates have declined steadily since 1980. (Source if you choose to use stat: Washington Post)
  • This can hurt retirees because married couples are eligible for certain benefits that singles are not. For instance, surviving spouses can get up to 100% of their partner's Social Security payments. (Source if you choose to use stat: U.S. News and World Report)
  • Singles need to save more - even up to 20% more throughout their working years. This is especially important for single women, because women generally earn less and live longer.
  • Married couples have a spouse to lean on during a financial crisis. As a single, think about creating a financial team. A trusted attorney and financial professional are both great to have on your side.

4. More Debt, More Problems

  • Credit card debt has been on the rise for 10 years, and student loan debt is nearing $1.3 trillion. (Source if you choose to use stats: Value Penguin & Student Loan Hero)
  • One of the best ways to wipe out debt is by setting a budget and sticking to it.
  • Remember, the decisions you make today could have an impact decades from now. If you’re living outside your means, you may not be able to afford the lifestyle you want come retirement time.

5. Healthy Spending

  • Health care costs in retirement continue to rise. Between 2014 and 2015 the cost rose 11%. (Source if you choose to use stat: CNN Money)
  • Fidelity Investments estimates a 65-year-old couple will pay $260,000 for health care during retirement; $70,000 more than it estimated in 2005. (Source if you choose to use stat: Fidelity)
  • Although you can’t see into the future, you can take a look at your family history to give you an indication of what kind of care you’ll need. Use that as a guide when determining what kind of coverage you want.
  • Keep in mind Medicare and health insurance plans do not cover long-term care. But, on average, 70% of retirees will need some form of it and it’s not cheap. (Source if you choose to use stat: Think Advisor)
  • Assisted living costs about $43,500 a year and a nursing home is nearly twice as expensive! (Source if you choose to use stat: Pittsburgh Post-Gazette)

Q: Is there are bright side to all this doom and gloom?

  • Yes. New research shows Millennials and Gen Xers are off to a good start when it comes to retirement planning! 58% of Millennials and 65% of Gen Xers are saving for retirement compared to just 55% of baby boomers. (Source if you choose to use stat: Go Banking Rates)
  • More than a third of millennials know how much they’ll need when they retire.
  • But, getting rid of debt and on budget is the first step toward a successful future.


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