The continuous pressure on pensions has forced many workers to reconsider retiring early or even retiring at 65 — the traditional date of retirement. Instead, they’re now being forced to retire at 70 due to reducing pension payouts and the increased cost of living.
One driver for this trend is the increased lifespans of many Americans, which has led to an increase in the number of years spent in retirement. In 1950, the average worker spent eight years in retirement; in 2010, the average figure was 20 years. Given that the average worker spends around 40 years in full-time work, that leaves a substantial burden to be paid by various companies for every worker that is currently drawing from a pension plan.
Indeed, CalPERS, the California Public Employees’ Retirement System and the fifth-largest pension provider in the United States, is only 69 percent funded as of June 2016 for this very reason. This has created several issues recently with ex-employees finding out that their pensions were no longer worth as much as anticipated due to employer funding being discontinued. Similarly, Social Security is only funded fully until 2034, after which it can only pay about 75 percent of its estimated benefits unless something dramatic happens.
You May be Working Past The Age of 65
Due to increasing life expectancy, workers are also finding that they can work until age 70. For many, this helps them increase their pension portfolio significantly. Because they’re not withdrawing money during this time, it gives them a few more years to make contributions without diminishing balances. As far as Social Security goes, working longer results in a potentially bigger payout for both the employee and any surviving spouse in the future.
Healthcare is one of the biggest costs for many retirees, as health often declines dramatically after age 65. Health insurance may be cheaper when provided through an employer rather than through a private exchange, keeping some people active in the workforce.
Many people have interests outside of work, and this means that they like to retire earlier to pursue those interests. If that is the case, they have to take lower Social Security payouts and also plan their retirement carefully — often planning several decades in advance. Suitable investments in property and a well-balanced stock portfolio can gradually increase retirement savings, and property in particular provides structured returns on income.
Your Retirement Portfolio Needs a Safe Have Asset
Every retirement portfolios need a strong hedge to ensure long-term stability, and that’s where precious metals such as gold come in. This is particularly the case when you’re investing in currency, but metals are also extremely useful when you are investing in stocks and shares. Gold IRA often comes to the fore during times of economic uncertainty, providing you with a return even other investments are plummeting.
If you want to retire early, a good retirement plan is essential. There are advantages to working until age 70, of course, but pursuing your own dreams is much easier without work getting in the way.