You’ll Need to Overcome These Secret Obstacles to Have a Happy Retirement

How would you like your retirement to look? Travel? Golf? Getting together as a family? You’ve worked hard and earned the right to do as you want after a long and successful career.
Okay, but can you afford it?

Research conducted by Northwestern Mutual in 2024 found that the average American age 18 and up estimates they will need $1.25 million to retire comfortably, up 20% from the previous year. They, too, have a ways to go.

According to Northwestern Mutual, the average retirement accounts fell by 11% from almost $99,000 to roughly $87,000 during the past year. That’s the case for those who already own them.

There’s a good chance you heard your grandparents brag about the steady monthly income they received from their pensions, which were paid for by an employer-funded pension plan. But beginning in the 1980s, with the advent of 401(k) plans, the onus of retirement savings began to fall on employees rather than employers.

Unfortunately, many people among the 57 million Americans who no longer have access to an employer retirement savings plan do not make any effort to save for their future. Small businesses do not typically offer retirement plans, barbershops, and auto repair shops.

College Ave Student Loans surveyed 1,010 parents of college-aged students in 2024 and found that 43 percent of families were concerned about saving enough money for college and retirement. Five-and-a-half percent of the parents surveyed said they would put off retirement savings to help their children afford higher education.

According to Teresa Ghilarducci, an economic policy research professor at The New School in New York, this is not the best course of action. Her advice was to put as much as possible toward retirement savings each month and only 10% toward education costs.

Your kids can get financial aid through scholarships and grants or take out student loans to cover the costs of higher education. Retirement savings are not eligible for borrowing.

Having Medicare cover all of your medical costs in retirement is unrealistic. A couple retiring today at age 65 may require $315,000 in post-tax savings to cover their health care expenditures in retirement, according to the Fidelity Retiree Health Care Cost Estimate.

You should open health savings account at work if you plan to use it for medical expenses while you are still working and are at least a few years away from retirement. You can withdraw your contributions tax-free if they’re used for medical purposes. If you don’t spend it, the balance carries over to the following year and can be invested.

It would be ideal if you considered looking into long-term care insurance, which can help cover the cost of assisted living or nursing facility care. The average monthly cost of assisted living is $4,500, according to the 2021 Genworth Cost of Care Survey, while the average monthly price of a private nursing home room is $8,910.

You have more financial flexibility and time to ride out market fluctuations when you start investing when you’re younger. You may recover from a market downturn at your own pace. However, what about your parents? Due to the shortening time horizon, investors should take a more cautious approach before they may require their retirement money. For those who are retired or about to be, a financial advisor can help them establish the optimal portfolio balance to ensure their financial security.