FROM HUMBLE BEGINNINGS…
It was in 1857 that New York City began offering the first public pension: a lump-sum payment to police officers injured in the line of duty. In 1875, the American Express Company began offering private pensions. Since then, the nature of retirement has changed drastically, from the expansion of pensions to cover most workers to the replacement of pensions with 401(k) accounts and other investment vehicles.
RETIEMENT HAS CHANGED CONSIDERABLY
- Americans are living healthier, longer lives. Though that's usually seen as positive, it can present issues from a financial planning perspective. Now that people regularly live 30 - 35 years in retirement, careful planning must be undertaken to have a fulfilling retirement without outliving your nest egg.
- Retirement has gotten more complicated. Twenty-five years ago, if you retired and started to receive Social Security, it would cover 65% of your income. Now, it covers about half of that. Furthermore, if you needed more than your Social Security income, you could likely rely on your pension, which covered about half of all private sector workers in 1980. Now, less than one in five companies offer pension plans. Now, most companies have moved from pensions to defined contribution plans, which means your income could vary substantially from month to month and year to year.
- Employers used to cover retiree’s health care costs, which is no longer the case. These costs can be substantial to a retiree: Fidelity projects that an average couple retiring in 2020 will need almost $300,000 (after-tax) to pay for healthcare expenses in retirement. Finally, between a mortgage, credit card debt, and even student loans, older Americans are retiring with more outstanding debt than they used to. Not only does this create issues crafting a financial plan, it also has detrimental impacts on retirees’ mental health.
WHERE WE COME IN
With all this in mind, it’s important to have a good Financial Planner in your corner. HCM Wealth Advisors has been helping people retire well for over 30 years. For some insight into our process, you can read our Retirement Roadmap, where we lay out the goals we aim to help you achieve in retirement and the method by which we do that.
RETIREMENT INVESTING IS DIFFERENT
For a deeper dive on what you need to watch out for now that you’re in retirement, you can read Why Retirement Investing is Different. Here, you can learn about the different kinds of investment risks you’ll face once you transition from accumulating wealth to living off of distributions of your wealth, as well as how we help you manage those risks.