Time passes by silently and quickly, often leaving us baffled as to how much of it has elapsed.
For instance, we can see that another generation, often referred to as Generation X has set foot in their fifties. And so it is understandable to talk a bit about their retirement prospects. However, this generation has decided to take matters into their own hands in order to plan how their lives after retirement will pan out. Most of these Gen Xers is looking to invest money in order to prioritize their health, wealth and work prospects.
Considerations about Work
For most of the people that belong to this Generation X, work is one of the most important aspects of their lives. The data that has been extracted from several surveys reveals that nearly 55% of the Gen Xers work with the ambition of achieving stable financial status. While on the other hand, there are those that need to keep working in order to sustain their current life standards.
This percentage is about 33% of the respective generation. So it is safe to say that most of the Gen Xers would like to see themselves working beyond their retirement years. However, the expectations are that working beyond the retirement years should be rewarding in more aspects and not just in monetary terms. Indeed, many of these people feel the urge to work in order to stay socially active and doing something meaningful with their lives. The nature of the work that they partake in might change a little. People expect that the work that now indulge in should be less demanding and intense.
The Significance of Money
There are many factors that might influence the decision of people to work beyond their retirement years. However, the most important of these factors is money. A study reveals that almost 77% of the people that were involved, want to stay working in order to afford the lives that they have become so accustomed. From among these, about 64% of the people want to push further and aim for more money than what they were making before retirement. But this does not present the complete picture and indeed about 32% of the study sample are those that have not given much thought to their retirement plans and what they expect to do after that.
Ambitions and Obstacles
For many of the people belonging to Generation X, saving money is not the issue. Most Gen Xers have been able to pay off the debts that they owed while the remaining are on the course of doing so. The main emphasis is maintaining the standard of life. However, it is not just limited to that. The most common activities that these people would like to indulge in might include travelling, relaxing, volunteer work, quality time with the family and pursuing their hobbies.
But in order to do all this they must consider all the hurdles and obstacles that might foil their plans. The Great Recession was one of the significant factors. While recently we have seen that the cost of health care has gone up considerably. Similarly, the cost of higher education has also increased somewhat so aging parents and children’s education should as be kept in consideration while saving money for retirement.
The Importance of Financial Assistance
It is safe to say that consulting a competent financial assistant would go a long way to ensure that most of the Gen Xers are able to make smart decisions and save money for all the expected and unexpected expenditures after their retirement. Therefore, it is strongly advised that a financial agent should always be consulted, especially by people planning to retire.
How to manage savings during retirement?
It is important to consider saving for retirement as an asset, as an income generator under certain conditions. Below we present the questions that one must answer to be correct in his strategy of managing it.
One of the most important issues that any person who saves to supplement their retirement, beyond the income that the Social Security public pension report, must deal with is how to manage the money accumulated during this period. Withdrawal of funds too quickly can result in running out of additional funds, which could result in a decline in the quality of life in recent years. Therefore, it is convenient to consider that retirement savings as an asset, as a generator of income that should be protected at least during one’s life.
There are five big questions that one must answer, allowing you to make decisions about how to manage it and how much one can draw from your funds to get the goals according to the answers.
But first of all I want to say that between each of the options presented here there is no need to choose between one or the other. You can work with a combination of options and in this way cover different aspects depending on the priorities of each.
Who takes the risk?
The first thing one should ask is if he wants to take the risk of managing that money. If your answer is no, the best option is to buy an annuity. It is about “selling” the money saved for retirement to an insurance company and acquiring an annuity. The insurance company agrees to pay a monthly amount for life. There are a multitude of options: you can acquire a fixed annuity, one whose amount evolves with inflation or an established%; A guaranteed minimum duration or one that pays an income to your spouse or to whom you decide if you die before with certain terms of time. It also depends on the age of the hiring. Any of these varieties cost more or less money but it may be worth it.
The most important thing is to assess if we want the income to rise with inflation or not. We already saw in an earlier post the impact of inflation. If so, the initial fee would be lower than without this option but over time will continue to increase. To this day, approximately after 18 years both options are on a par. That is, until the age of 18, the flat option has an advantage with a higher income at the beginning and from the age of 18, the option of automatic adjustment for the CPI (3% of average) gains.
The great advantages of this system is that one does not have to manage their own money and the lifetime guarantee: important issues for people who do not want or can take time to take risks. To get the best offer it is worth asking for several offers to different companies. In addition, it is worth mentioning special conditions, for example serious genetic diseases in the family, that can raise the quota because it is estimated that life will probably be shorter.
Obviously, it also has two major drawbacks. The purchase of an annuity is a contract that is fixed at the time of exchange of money saved by the agreed conditions. It is an action that can not be revoked. Once purchased the money saved is no longer yours but the insurance company. Therefore, it is not possible to withdraw part of the same in case of necessity above the contracted quota. Another drawback is that you can not leave money in inheritance to the children. With the death of the contractor, the guarantee is terminated.