Some solopreneurs
think they will “work forever,” but that perception may be flawed.
Provided by Benjamin Bogetto
About 20% of Americans
aged 65-74 are still working.
A 2016 Pew Research Center study put the precise figure at 18.8%, and Pew
estimates that it will reach 31.9% in 2022. That estimate seems reasonable:
people are living longer, and the labor force participation rate for Americans
aged 65-74 has been rising since the early 1990s.1,2
It
may be unreasonable, though, for a pre-retiree to blindly assume he or she will
be working at that age. Census Bureau data indicates that the average
retirement age in this country is 63.3
When do the self-employed
anticipate retiring? A
2017 Transamerica Center for Retirement Studies survey finds that 56% of U.S.
solopreneurs think they will retire after 65 or not at all.4
Are financial uncertainties promoting this
view? Not necessarily. Yes, the survey respondents had definite money concerns
– 28% felt Social Security benefits might be reduced in the future; 22% were
unsure that their retirement income and accumulated savings would prove
sufficient; and 26% suspected they were not saving enough for their tomorrows.
On the other hand, 54% of these self-employed people said that they wanted to
work in retirement because they enjoyed their job or profession, and 67% felt
working would help them remain active.4
Is their
retirement assumption realistic? Time will tell. The baby boom generation may
rewrite the book on retirement. Social Security’s Life Expectancy Calculator
tells us that today’s average 60-year-old woman will live to age 86. Today’s
average 60-year-old man will live to age 83. Leaving work at 65 could mean a
20-year retirement for either of them, and they might live past 90 if their
health holds up. Even if these Americans quit working at age 70, they could
still need more than a dozen years of retirement money.5
You could argue that an affluent,
self-employed individual is hardly the “average” American retiree. Many
solopreneurs own businesses; doctors and lawyers may fully or partly own
professional practices; real estate investors and developers may have passive
income streams. These groups do not represent the entirety of the
self-employed, however – and even these individuals can face the challenge of
having to sell a business, a practice, or real property to boost their
retirement savings.
Successful, self-employed people over 50
need to approach the critical years of retirement planning with the same
scrutiny and concerted effort of other pre-retirees.
Look at the
years after 50 as a time to intensify your retirement planning. This is the right time
to determine how much retirement income you will need and how much more you
need to save to generate it. This is the time to evaluate your level of
investment risk and to think about when to collect Social Security. This is the
time to examine your assumptions.
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future
results. The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for the
purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.
Bogetto & Associates does not provide legal or tax advice. These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.
Citations.
1 - nytimes.com/2017/03/02/business/retirement/workers-are-working-longer-and-better.html
[3/2/17]
2 - pewresearch.org/fact-tank/2014/01/07/number-of-older-americans-in-the-workforce-is-on-the-rise/
[1/7/14]
3 - thebalance.com/average-retirement-age-in-the-united-states-2388864
[12/24/16]
4 -
transamericacenter.org/docs/default-source/global-survey-2016/tcrs2017_pr_retirement_preparations_of_self-employed.pdf
[1/31/17]
5 - ssa.gov/OACT/population/longevity.html
[3/9/17]
Financial Health...For Now & Tomorrow
Contact us Today
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
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