If you’re following conventional advice, you’re socking away 10 to 15 percent of your annual income for retirement. Obviously, depending on when you start, this may or may not be enough to cover your expenses down the line. It’s imperative that you do the math and adjust your monthly retirement savings accordingly.
Unfortunately, this math must now likely include expenses once generally excluded from retirement — debt. While we once entered retirement age having paid off house payments, car payments, and other loans, today an increasing number of people are retiring with debt that may take them a number of more years to pay off.
As reported by The Wall Street Journal, the Employment Benefit Research Institute’s (EBRI) most recent report shows that:
- 8.3 percent of households 65 to 74 have debt that represents more than 40 percent of their income
- 41 percent of households 65 to 74 have debt tied to their home
- 24 percent of households 75+ have debt tied to their home
- 38.5 percent of households 75+ carry debt overall
What this may mean is that we must either save a greater percentage of our income, or work longer past traditional retirement years. That said, putting away more than 10 to 15 percent of your income for retirement may be the best you can do considering your current debt load. If so, it’s worth planning for a longer work-life, especially if you are 55 or over.
Though unemployment tends to be the lowest for those 55 to 64 years old, those who are unemployed have a tougher time getting back into the job market than any other demographic. For this reason, it’s important to think about career longevity and job security:
- Look into growing fields, such as healthcare, education, and non-profits
- Get tech savvy
Even if you’re not interested in making a career or job change right now, you never know when the time could come that such a move is attractive, or even necessary. The sooner you start preparing for it, the more perfectly poised you’ll be to make the transition. And, if anything, you’ll simply strengthen your value in your current field and/or position.