Are we facing a retirement crisis? Absolutely!

This was the conclusion of the PBS Frontline segment on preparing for retirement, titled The Retirement Gamble.

In today’s world, most working individuals have busy lives and are not spending enough time focusing on retirement; however, what most people don’t realize is that it is their responsibility to know how to invest and identify how much money may be needed at any given point.

When broken down, it’s all incredibly confusing.

Most working adults no longer have a pension, unless they work for the state or federal government. There is also uncertainty about the current state of Social Security (although I would argue that it’s here to stay…just simply in a different form than we know now).

Most individuals feel dumbfounded as to what they should do. This is similar to the frustration I feel when the toilet clogs up — I truly don’t know what to do. This was the kind of maintenance issue my grandfather could easily fix, and he was a college professor. I on the other hand, don’t know the first thing about plumbing.

This kind of home repair situation also reminds me of a recent ordeal involving the roof on my 108-year old home. The shingles had begun to show some wear and a beam had split. Rather than deal with it, I let it go… Bad idea! After enduring a snowstorm already this winter, and two hailstorms earlier in the year, it was finally time to get the roof redone. But procrastinating did not act in my favor. I was snowed under, literally.

Acknowledging the Uncertainty in 401k Investing

Most individuals are overwhelmed by all of the knowledge needed to have in order to invest. Additionally, unlike other products and services, it is difficult to know the price or quality of what to invest in your 401k.

The risk of investing in a 401k lies with the individual. This is vastly different from the previous form of retirement saving, known as a pension, in which a professional was responsible for the actual investing. These experts were held accountable for knowing how much an individual should save, what areas he or she should put their money into, and how much could be safely withdrawn.

When Accidents Occur – Preparing for Medical Expenses In Retirement

Measuring your 401k options is only the retirement side of the equation. To properly prepare, we must also look at the medical side of benefits.

A couple of years ago, Fidelity came out with a study that indicated a couple wanting to retire in 2012 would need more than $240,000 to cover medical costs alone. This study suggests that medical costs are increasing much faster than other costs.

This information forces us to wonder: do we have enough to pay for our medical expenses?

Medicare is responsible for aiding retirees in paying for healthcare costs. But Medicare payouts are declining. Individuals are now living longer, and the last few years of life are typically much more expensive in terms of healthcare. This places a heavy burden on the individual to make both financial and medical decisions at the same time.

In addition to the decrease in payouts, Medicare also does not cover most long-term care, which forces many retirees to dip into retirement savings more quickly than they may have anticipated.

Proper preparation for a comfortable retirement doesn’t have to be an intimidating ordeal. Rather than postponing your retirement planning like I did with repairing my roof, start constructing your plan today. Don’t get snowed under.