If you're in your 30's right now, you might feel that those golden years of retirement may never happen. Experts are predicting that Millennials will have to keep working until they drop dead. But can this really be true?
You might have heard that retirement isn't what it used to be. In fact, who calls it the "Golden Years" anymore? These days, our vision of life in our 60s and beyond more than likely contains some version of ourselves working... working and seriously downsizing our lifestyle expectations.
But this is not just a 30-something's vision of the future: it's already happening. Even older generations are facing a completely different retirement scene right now: they're working longer, living longer, and they're forced to rely less and less on Social Security. (For related reading, see: 3 Crucial Tips for Living Within Your Means.)
So, what will retirement be like for people who are in their 30's now?
30-Somethings Face a Different World
Back when Social Security was invented, the retirement age was set at 65. That seemed reasonable for the day, since the average life expectancy was around 62. Today, people who retire at 65 need to come up with a "second chapter" because, well... with an average life expectancy almost 20 years longer, chances are there will be a second chapter in many people's lives.
And if your second chapter doesn't involve some sort of income-producing activity, then you're going to need a whole lot of money saved up before you can even think about signing up for painting classes, hitting the golf course, or whatever it is you plan on doing in retirement.
But things don't look so good on that front. Take a look at how your elders are doing in that department...
Americans Don't Seem to Be Good at Saving
Thirty-eight percent of Americans don't save at all for retirement. Even for those who do save, the average savings of a 50-year old is only $42,797 according to some estimates. I'm not sure how everyone plans on affording retirement, but if they think Social Security will carry them through, they really haven't been reading the news in the last 10 years! Social Security will be around, probably, but it's predicted that it will cover only a fraction of your living costs.
Think Your Fortune 500 Career Will Save You?
Maybe you feel invincible: you're in your 30's, you have a well-paying job, and life seems rosy, retirement seems doable. I'm just going to play devil's advocate with you for a moment: what if your job is no longer there in 20 years?
I don't mean the exact job you hold right now. I mean your industry: it can change, making your type of job obsolete. Technology is advancing so fast that many jobs are going the way of the ten-cent candy bar as other, new jobs are created. One of the most respected financial advisors in the nation, Ric Edelman, talks about this on the "Between Now and Success" podcast hosted by Steve Sanduski.
You Might Be Peaking Right Now With Your Salary
You're probably not going to have that Fortune 500 or otherwise high-paying job when you hit your late 40s or 50s. I've seen it first-hand. When I worked at Morgan Stanley, you could look around the building and hardly see anyone over 50. Why? Because you either get too burned out to keep up, or you make too much money and they replace you. Of course, no one ever gets fired... they leave the firm for new opportunities (wink wink).
The older you get, the harder it will be to command the salary you are currently receiving.
What Can You Do?
I want to stress that there are things you can do right now, while you are in your 30s, to ensure you don't end up destitute and unhappy during retirement. Start planning now for your next career. Then, start living below your means, or at least within your means. Finally, save for the unknown.