Lately, Walter Reissman has been counseling a new demographic: people in their 50’s and 60’s who have balanced budgets, supported families, and held down jobs responsibly for many decades.
Why are they now seeking advice from Walter Reissman? It’s because they have saved little or almost nothing for retirement. Some have been let go from their jobs in these covid pandemic times and literally have no money and no cushion to see them through these times.
The Retirement Problem
A person who has worked their whole life helped their kids, and done all the things a good Mother and Father do- will not on principle go their kids and ask for money back to pay their bills nor are they quick to sell their house and drastically downsize. Walter Reissman feels this is a huge problem facing our senior
13% of those 60 and older have no retirement savings. When it comes to those 45-59, the number increases to 17%. Those who are saving for retirement will be living on a very modest retirement income.
The average amount 59-64-year-olds have saved for retirement is only $120,000. Over 15 years, which is the average length of retirement, this gives seniors only $1,000 a month of retirement savings.
Preparing for the Future
Walter Reissman suggests the best way to avoid this situation is to start planning for retirement many, many years earlier, no matter how daunting a prospect that may be.
Everyone says they don’t have enough money to do it, but there is generally enough money for what is important and retirement should be first and foremost. When something’s important, Walter Reissman believes: You make it happen.
Start Small and Early
The earlier you start saving for retirement, the better off you will be. This may seem obvious. However, if you start early, you can invest a smaller portion of your paycheck and get a bigger retirement return.
The following figures are based on two assumptions. That you invest in the stock market, which averages a 7% return, and that you place the money into a Roth IRA.
If you begin saving at age 22, you will have $165,776 by age 67 if you put $10 a week into your retirement fund. $10 a week adds up to one movie ticket or a trip to Starbucks. This small sacrifice can give you stability in retirement.
At $20 a week, you’ll have $331,553 by 67. At $50, a week, you’ll have $828,882. This is more than enough for a comfortable retirement.
What About Social Security?
Walter Reissman notes that many people find themselves depending on their social security benefits to survive during retirement. The average retiree’s social security check only provides 40% of the monthly income they’re used to, at $1,500 a month, leaving a big gap that is difficult to fill with modest retirement savings.
To make matters worse, social security may be depleted by the year 2034. Those now entering retirement may outlive their social security benefits if this holds true. Those retiring in the future may not be able to rely on social security at all.