If you are 55 and older you probably start thinking about your retirement a bit more seriously now than before. You may even have set a date when you leave your work behind once and for all. Because you have saved and invested diligently your whole life, and you will retire when you have planned for.
In reality though, studies from 2024 to 2025 show that roughly only 3 out of 10 working Americans actually retire according to their planned retirement age, the other 7 are forced to retire early due to health reasons or company-related issues, or are still working in their 70s or even 80s due to insufficient funds, and may never be able to retire.
When things are going well, we tend to think that they will always stay that way. But many life changing events happened when you least expect them, disrupting your plan. Can you say, at this moment, with confidence that if you have to retire tomorrow, you have sufficient funds to support your preferred life style for 30, possibly 40 years?
If you are an investor, you have probably read in the news that lately S&P 500 stock index keeps reaching new record highs. Does this mean that US stock market has reached “bubble” level? There is some consensus among investment professionals that the current US stock market is richly valued according to historical standards. If you recall, we had a so called “dot com” bubble in early 2000. When that “bubble” busted, from peak to bottom, the market actually went down 49% and the correction lasted 56 months. For investors at that time, especially those who were either retired or living off of their portfolios, it was tough time trying to determine how long the downturn would last or how deep it would go. People who had, at one time, $1 million suddenly saw half of that amount on their brokerage statements. It was a scary time, especially if you were a retiree and taking income from your portfolio. Could it happen again? I think we all know the answer is “yes, it could happen again; the question is, “When?” What if you are forced to retire at a market high and subsequently comes a correction, are your assets well positioned to withstand a market correction?
While media and ads implant in our brain the images of silver-haired retirees traveling around the world, trips to the emergency rooms are far more prevalent as people age. Financial professionals see first-hand many aging retirees face the harsh reality of financial stress on how to afford the care they need. For example, in 2025 the average annual cost of a nursing home room ranges from $80,000 to over $100,000 in Dallas-Fort Worth metro area. Besides cost, when dressing or bathing become difficult for you, or driving becomes dangerous, have you thought about who will step in to take care of you, or make crucial medical treatment decisions if you are unable to? What about if you and your spouse both need such care?
These are some of the key questions people age 50 and older should ask themselves about. When financial markets are doing well like now, complacency tends to brew. Don’t let the complacency ruin your dream retirement.