Do You Have Enough of a Financial Cushion for Retirement?

I just spent Mother’s Day with two retirees: my mother and my daughter-in-law’s mother.

My mother is fortunate. Her husband left her in a satisfactory position financially. Although she still worries whether she’ll have enough money as the years go by for expenses like prescription drugs, doctor bills and rent increases on her condo, she knows she’s not alone and does have financial resources.

My daughter-in-law’s mother is a different story. She receives Social Security and some child support for a late-in-life baby, but she just can’t make ends meet. My daughter-in-law has put her on a strict budget, yet still has to help her out financially.

Two women of the same age and different circumstances, but sharing one commonality: They never thought they would have to worry about money when they retired. Now, this is all they worry about. And they’re not alone. About two-thirds of surveyed retirees said their monthly expenses are about the same as or higher than before retirement. In other words, the purported 70% of current income needed to cover one’s expenses in retirement turns out to be unrealistic.

Health care is becoming the No. 1 expense in retirement. Even with Social Security and Medicare, retirees are spending out of pocket because health insurance premiums and all health-related costs are higher than expected. And then retirees are finding that travel and entertainment are costing more than predicted. For those who were counting on profiting off their personal residence when they downsized into a retirement community, they’re finding that the profit doesn’t cover as much as they thought it would. Nursing homes, assisted living…for most retirees it is out of the question.

In general, the pre-boomer generation was better at saving and preparing for retirement for a number of reasons. We can learn from our parents—or grandparents, depending on your age—by putting away as much money as possible and investing in assets that will help you during those retirement years. You cannot afford to depend on Social Security and Medicare to cover your needs 10, 20 or more years from now. Whether you invest in stocks, funds, real estate or businesses, the bottom line is that you need to save, even if it is just a few hundred dollars a month. Start now to grow that nest egg and retire free from worry.

Certainly money is not everything. Health, family, and enjoying life are of the utmost importance. However, don’t ignore that money does matter, no matter where you are in your cycle of life. Money plays a role in keeping good health, providing for your family (or not being dependent on them providing for you), and pursuing the interests that you enjoy, whether it’s travel, volunteering to help others, or a particular hobby. You can help yourself to help your future.

If you would like more information about using a self-directed IRA or 401(K) to pursue the investments that are important to you, visit The Entrust Group at www.theentrustgroup.com