Retirement In Sight #2 (Musings for Current & Future Retirees)
As mentioned before, from time to time I am asked for information and thought on issues related to retirement, both for those already enjoying it, as well as for us who still have it in our future.
So, as promised, periodically I will offer in this space, as it says above, musings for current and future retirees. I hope you enjoy this second offering on the subject.
What Will $50,000 Be Worth in 25 Years?
If you are on the verge of retiring, this question is well worth asking. You cannot know what the exact answer will be; you can, however, anticipate that it will be worth less. Inflation will exact a slow, but significant, toll on your retirement savings. Historically, consumer prices have risen about 2-3% per year. Your retirement fund should be growing at least that much annually; if not, your income and savings could effectively remain at current levels, while the goods and services you rely on grow more expensive. This implies a compromise to your lifestyle.
The lesson here is that you may be taking a risk if you turn away from equity investments - the risk of losing purchasing power. While the market's ups and downs can be pronounced, the growth potential of stocks and other equity investments remains strong through market cycles.
You also need to account for inflation as you save for retirement. You may need to save more than you think to help counteract inflation's effect. If inflation hypothetically stays at just 2% a year for the next 25 years, today's $50,000 in cash will buy the equivalent of $30,476 worth of goods and services in 2043. 1
Yes, Retirement Can Mean an Adjustment for Couples
When spouses or partners retire, free time is suddenly abundant. Spending the whole day together is possible, but for some couples, perhaps less than advisable. One person's routine can seem less ambitious or energetic than the other's, and that may become irritating, even if the difference largely stems from health issues. Sometimes one spouse or partner has little idea of "what's next", especially if self-worth is tied closely to professional or career identity.
Retiring spouses need independence as well as togetherness. They need to understand what the other spouse wants to do on a typical day and allow each other freedom (including reasonable financial freedom) to pursue those hobbies and passions, so long as the household finances and retirement savings are not jeopardized. Some retirement counselors recommend spouses spend hours of the day apart and meet for lunch or dinner (either in or out, as the budget permits).2
When Gadgets Get on Your Nerves
Speaking of adjustments, in some retiree households, technology can cause friction. Maybe one spouse or partner is tech-savvy, while the other is not. Maybe one spouse or partner overshares on social media, to the other's dismay. Or, one or both parties use their phones, tablets, or computers as distractions from relationship issues. According to a new Oxford University study, couples that frequently used five or more electronic communication channels reported 14% less satisfaction in their relationships than couples less reliant on them.
If too much tech is making your retired life harder instead of easier, think about these steps. Set aside some unplugged time - no screens at dinner, for example. Talk to your spouse or partner in person rather than via text. Affirm your spouse or partner in what you post, instead of merely including him or her. A lack of face-to-face engagement can make someone feel lonely and detached, but a good and open conversation can bring couples closer.3
On the BRIGHT SIDE
Recent research from Oregon State University concluded that healthy seniors who retired near age 66 (that is, at or near Social Security's Full Retirement Age) had mortality rates 11% lower than seniors who retired earlier.4
Also, according to a recent Employee Benefit Research Institute study of retiree savings, almost a third of U.S. retirees had greater amounts of non-housing assets 18 years into retirement than they did when they first retired.5