In our personal lives, we approach large amounts of debt with a long-term timeframe. For example, the 30-year mortgage. So it stands to reason that the U.S. national debt – currently in the ballpark of $16.7 trillion – will require a long-term plan as well.
If you’d like to get the up-to-the-fraction-of-a-second update on our national debt toll, check out the Debt Clock:
Planning for retirement poses the same long-term challenges, for both us as individuals and for the government. Many of us may have to reduce current spending as well as save aggressively and invest prudently to create our own retirement income. Likewise, the government has to find a way to fund and/or cut Social Security and Medicare benefits for the millions of baby boomers scheduled to retire over the next 20 years.
At this point, it may be smart to think of your personal savings and investment strategy as your primary source of retirement income, and Social Security benefits as supplementary. That’s the way the system was designed to work back in 1935 when President Roosevelt signed it into law, but it hasn’t really worked out that way. In recent decades, far too many people have been relying primarily on Social Security benefits for the bulk of their retirement income – particularly elderly women.
Over time, things change. Like the fact that most women now work and earn their own income and contribute to their own retirement plans. In fact, recent research indicates that women are rapidly closing the gap between the percentage of income they stash away for retirement when compared to men.
The reason planning for retirement is so difficult is because few people can accurately predict how long they are going to live. You could live significantly longer than you might imagine – as evidenced by comedian George Burns, who smoked cigars for more than 70 years and still lived to age 100.
The question is how much income to draw from your retirement savings assets as a new retiree so as not to risk running out later. There are many products and strategies on the market these days that can help address this issue. If it’s one you’re pondering and would like to discuss further, we’d be happy to help you develop a strategy that’s appropriate for your goals and financial situation.
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Source: Woods Blog Old