Why You Should be Concerned

The stark fact is that one of the following statements is probably true of your retirement plan today:

• It does not exist at all.

• It does exist but only in your head as thoughts and good intentions.

• It exists and is partly in place, but at this pace, it will not produce enough in time.

• It exists, but you fear new global economic turndowns or unforeseen expenses cropping up.

Statistics that will scare you

'The risk that retirees will outlive their assets is a growing challenge,' says the US Government's Accountability Office. Increased life expectancies and healthcare costs, coupled with declines in financial markets and home values over the last few years, have intensified workers' concerns about how to manage their savings in retirement. And what are some of the US Government's suggestions?

• Delay taking your Social Security (to seventy years old).

• Buy an annuity to supplement your monthly income.

After pouring that bucket of cold water over your head, the US Social Security's Trustees said in May 2011 that it would not be able to pay recipients in full beginning 2036 anyway. What a bombshell. In other words, as highlighted in The Economist,

'The pension hole just keeps getting bigger. Assets owned by pension schemes have generally been falling in price while their liabilities have been rising relentlessly. The numbers boggle the mind.'

Assets falling; liabilities rising relentlessly—that's not what we want to hear, is it? Especially when we see population demographic trends like the percentage of Americans in retirement age increasing from 11% in 1990 to 20% by 2020, from roughly 30 million to 55 million , or the number of Western Europeans over age 65 doubling in the same period. And it's not just the 'Old World' that is ageing rapidly. Consider the statistics of ageing in China: the number of retirees is set to double between 2005 and 2015, to 200 million people. Because the economy of China has been established using cheap labour from the countryside, how will the economy function when by 2050 the number of retirees has risen to 430 million people? And with the one-child policy in place for so many years, a married couple faces the prospect of caring for four ageing parents between them, instead of sharing the burden with siblings as in so many other countries.

Consider this next nugget regarding retiring Americans: 'Financial advisors estimate that the percentage of Americans who can actually save enough money to afford a reasonable lifestyle for twenty-five years without working is about 3%.' That's 3%! Now, you may or may not be living in the United States, but often this is where trends start and then fan out to the rest of the world, and it is simply a fact that chances are, wherever you live, your government is going to be ever less able to support you in your old age at the time when life expectancy (for developed nations) is increasing, and your costs of long-term medical care are increasing along with it.

Anne Karpf, writing for the United Kingdom's Guardian News, wrote about chronologically old people in the UK and the quality of medical care they should ideally receive:

'[A]ny group of older people needs to have enough [money] not to be reliant on a public sector starved of cash, and whose staff is amongst the lowest paid and lowest status of all public health workers'.

The line in the sand has been drawn: which camp will you be in?

Will you be in the camp of those with financial independence or those without? Statistically, as things stand, you will reach a retirement scenario where you have not saved enough. Anne Tergesen writes,

'[A]s people start to think about retirement, they recognize that they don't even have enough to pay their uninsured future medical expenses, much less have any savings for a decent income in retirement. The only solution is to work longer or to rely on their children as our ancestors did. But their children hardly realize the problems their parents will have—and they haven't saved enough either.'

In short, it is clear that you will need your money, your own money, to pay for a comfortable and independent retirement. There are many other aspects of ageing to consider as well, see if any of the following apply to you.

Is your 9-to-5 job helping or hindering you?

For those still in a 9-to-5 job, consider the aspects of ageing while still in full-time employment. With every year that goes by, chances are that holding on to your job becomes ever-more difficult. You may be perceived as being too expensive, too set in your ways, too unwilling to follow the rules, too lacking in energy or focus, or becoming a less ideal employee for other reasons. These kinds of perceptions (I call them excuses, but then I am sixty years old) are held generally by people younger than we are, so it's hardly surprising we hear them. But as you draw nearer to your desired retirement age, you may be struggling more and more to hold on to your position, a position that may not even be bringing in the money you know you will need for retirement. You may see yourself in a negative spiral, where it seems like the more you struggle, the worse it gets, and the less able you are to bring in the kind of funds you need to secure a future where increased costs of health-care are going to be a reality. So many may question, is the 9-to-5 job by itself the solution? While for a lucky minority it may be, we take the position here that finding other additional revenue sources is the sensible course of action.

Is your home an asset or a liability?

For those of you who own property, consider the aspect of ageing in your home. You may be living in a house where the mortgage exceeds the current market value of the property, even to the point where the monthly mortgage has increased to the level where you need to dip into your retirement funds to prop it up. Not a pretty picture, is it?

Does either of these scenarios sound familiar to your situation or to those close to you? Well, for the good news, and there is a lot of good news for you in this book, consider the following as you start to prepare for retirement:

• Nobody said you can only have one source of income, did they?

• Nobody said you can only work 9-to-5, did they? How about working when you like?

• Nobody said you cannot find other ways to use your valuable experience and knowledge, did they?

• Nobody said you cannot learn new skills, did they?

• Nobody said you cannot meet new people and start new networks and interest groups, did they?

We will be looking at this list in detail...