American retirement outcomes need improvement. Having
$100,000 saved in a 401k is not going to cut it. As we read daily, for the
majority of people household retirement savings and projected incomes are at
levels that will not sustain basic lifestyles when full-time work ends.
We are headed for a crisis for the many households who plan
to primarily rely on Social Security benefits for the bulk of their non-working
years’ incomes. As this situation unfolds, it will put substantial pressure on
government to increase benefits for these households. This will add another
initiative to increase stress on the federal budget.
At the same time, the medical community suggests that
individuals get routine screenings for many diseases at certain ages. The goal
of these screenings is to identify medical problems early, avoid costly medical
treatments and prevent unnecessary deaths. The same practice needs to be
adopted for retirement readiness.
I propose that an initiative be implemented to promote
regular retirement readiness checkups beginning at the latest age 45. In
reality, I think as soon as individuals begin full-time work, planning for
their later years should begin.
A Retirement Readiness Checkup Proposal
Here are some example areas that a retirement readiness
checkup could cover:
Finding purpose. What will people look to do or
what causes do they wish to embrace once “every day is a weekend”? Having
people think about what retirement looks like for them as early as possible
should help build awareness of the costs needed to fund the desired future
Lifestyle expenses. What level of spending should
be planned, including needed support for dependents or special needs children
Health care needs. With post age 65 medical costs
estimated at roughly $300,000 for a twenty-year retirement for two people, how
these costs will be funded using a combination of insurance, federal programs
and personal savings needs to be planned.
Social Security. Determining what amount of
benefits to expect when work ends.
Business needs. With more and more individuals
developing entrepreneurial business initiatives how should these businesses be
planned for as they age? What is the desired end game for the business?
Legal considerations. Are the necessary beneficiary
designations, estate planning considerations and health related powers of
attorney in place?
Savings strategy. How should the household use
available tax advantaged savings and insurance programs including 401k, IRAs,
annuities, cash value life insurance and health savings accounts. What level of
personal savings is needed to produce desired retirement income?
Investment options. Which investment options should
be used to put personal and retirement plan savings to work?
Long-term care needs. How will the household plan
to obtain some form of long-term care coverage that will likely be needed?
Today most households are ignoring this need incorrectly assuming that the
government will pay these costs.
Debt management. How much debt will they take into
retirement? Will they still be servicing mortgage and student loan debt as they
I also believe the cost of getting a readiness checkup
should be an allowable tax deduction. The more people get professional
financial advice, plan and take related actions, better retirement outcomes
Regular Checkups Could Find, and Correct, Problems
Retirement outcomes for Americans need to be improved. A
future retirement crisis is building for a large percentage of Americans.
One action that could be taken to address the coming
challenge is to increase the household awareness of their projected amount of
income, living expenses and other expected lifestyle needs in retirement.
By mandating periodic retirement readiness checkups
beginning at age 45, a checkup program should accomplish this goal and allow
sufficient time for implementing corrective strategies to achieve desired
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