The concept of retirement and what that means has been a hot subject in public policy. For many people, retirement living evokes images of sitting in the sun on some tropical island, free of all worries. For others, it represents an opportunity to explore passions, start a business, or learn a new hobby. Everyone has a unique retirement dream.
However, sadly, dreams don’t always align with reality. A Senior Housing Survey conducted by PropertyShark reveals many of the troubles that Baby Boomers and the oldest of Generation X are having when it comes to retirement. Their study of persons aged 45 or older revealed three key findings that could shape the financial and real estate landscape for younger generations.
Most Haven’t Saved Enough For Retirement
The survey found that over 60% of persons over 45 years of age have less than $100,000 saved for retirement. Only 4% have over $1 million saved. As a reminder, experts recommend that you have at least 10x your salary in retirement funds by the retirement age of 67.
For many people, this is at least half a million to $1 million in savings required. Younger generations would be wise to learn from these figures. There’s still time for Millenials and Generation Z to prioritize retirement savings.
Saving at least 15% of your income each year will ensure you hit the necessary milestones and have a comfortable retirement. Even if you cannot reach that magic 15% right now, get as close as you can to ensure you maximize your savings rate when you’re young.
Working In Retirement Is Viewed As A Necessity
Unfortunately, many people over 45 also assume they can work in their golden years. At least one-third of people surveyed plan on doing some work. Whether that’s launching a business or continuing professional obligations, working past 65 is viewed as both viable and necessary.
While it is entirely possible to continue your career into your 60s and 70s, it is by no means a given and should not be part of a reasonable retirement strategy. “A bad back or knee could quickly put a stop to plans of working after retirement”.
Also, the job landscape could change significantly within the next 10-20 years. It may be challenging to find work in your chosen field without either moving to another state or country or participating in significant training.
Florida Real Estate Is The Prize
Perhaps unsurprisingly, a large percentage of people picked Florida as their ideal destination. With low taxes, below-average cost of living, and a mild year-round climate, Florida makes a perfect retirement spot. Arizona, which has similar appealing factors, takes second place.
Of course, no state income tax also means that Social Security benefits are not taxed as well. Also, the sales tax rate is 6%, which is low compared with other parts of the country. All of these factors add up to Florida being a cheap place to retire with excellent weather.
For individuals looking to stretch every one of their retirement dollars (especially if they are behind where they should be), this state is probably going to be a hot destination in the coming decade or two.
Retirement Is Different For Every Generation
The bottom line is that retirement is different for every generation. Baby boomers and early Generation X have had a difficult time keeping up with rising medical and housing costs. These two issues have resulted in significantly lower retirement savings and a bias towards working in retirement.
Of course, when looking to stretch every dollar, you’re going to look at cheap places to live, and Florida is the winner. No matter what your age is, it’s never too late to try and save more for retirement.
Whether you are a Millenial reading this or a baby boomer inching towards 67 years old, consider what you can do to boost your savings rate. Small lifestyle changes can have a dramatic effect on your quality of life later. Consider what you can do to start achieving that 15% savings rate today!
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