Maintaining your financial security in retirement is harder than ever. There are factors threatening your plans for lifetime income security. Retirees have had to deal with some of these trends for years, but others are relatively new, or are becoming more significant.
Your job isn’t done when you retire. Things change during retirement, and you have to keep up with the changes. Too often, people who appear to be financially secure at the start of retirement see their assets dissipate because of unforeseen events and mistakes.
While there are a range of trends and factors you need to monitor during the post-career years, there are five I believe are the paramount threats to retirement security for today’s retirees and those soon to retire.
The foundations are crumbling. It’s no secret that both Social Security and Medicare aren’t in good financial shape. Every year the Trustees for Social Security and Medicare issue a report assessing the condition of the programs. While the details change from year to year, the long-term outlook isn’t good. Each year that Congress doesn’t act, we are closer to the time when the programs can’t fully pay the promised benefits.
These two programs are important to the financial stability and independence of most retirees, more than many pre-retirees realize. The importance of the programs grows the longer a person has been retired.
I don’t join the pessimists who say the programs will disappear and you can’t rely on receiving anything from them. But changes are likely, and you have to build flexibility in your retirement plan so you can adapt to those changes.
Changes to Social Security and Medicare are most likely to affect those in the top half of the income and wealth rankings. As in the past, changes to the programs are likely to be means-tested with reduced benefits and higher costs imposed on better-off retirees.