from the newsgroup:
FACTS YOU SHOULD KNOW ABOUT RETIREMENT
Did you know that over 100 years ago, the first retirement act was
established? In Germany, General Otto Von Bismarck set the age of
retirement at 65. Back then, only two percent of the population lived
to retire!
Nowadays, the fastest-growing segment of the population is age 80 and
over--we'll be enjoying retirement for 15 or more years, not just two
or three. Retirement definitely isn't what it use to be!
Whether we devote that time to our families, travel, hobbies or second
careers, we all want to be able to live out those years in comfort and
with the knowledge that we have enough for our needs.
A longer retirement is both the good news and the bad news. It is
fortunate to live a longer, healthier life, but where will the income
come from when we're ready to retire? An average American in 1992,
with an average household income of $35,000, received only 40% of his
or her income from Social Security. The rest came from personal
assets, private pensions, earnings and other sources.
Sources of Retirement Income
40% Social Security
10% Private Pensions
9% Government Employee Pensions
17% Earnings
21% Personal Assets
3% Other
100% Total
Source: Social Security Administration, 1992.
As the table indicates, you can expect to have to earn at least 38%
(earnings and personal assets) of your retirement income from personal
assets, private pensions, earnings and other sources.
According to a 1993 Department of Labor Survey, of every 1000 people
age 65, the following situations exist:
* 450 are dependent on their relatives.
* 280 rely entirely on public charity, welfare or Social Security.
* 220 must continue to work.
* 50 have enough money to meet their needs.
* Of these 50, only ten have enough money to provide the financial
independence that retirement should bring.
YOU MAY SPEND A THIRD OF YOUR LIFE IN RETIREMENT
Workers are retiring earlier. Longer life spans and earlier, healthier
retirements mean you may end up spending 15, 20, even 25 or more years
in retirement. It also means that there is more danger than ever of
out-living your income.
INFLATION
Another important reason you need to plan and save for retirement is
inflation. Inflation simply means that the cost of goods and services
generally rises over time, as shown by the Consumer Price Index (CPI).
This measurement of inflation is stated as a yearly percentage and,
according to the Department of Labor, has averaged approximately 5.4%
from 1965 through 1994.
For example, a loaf of bread costing $1.00 today would cost
$1.05 a year from now. In 20 years, that same loaf of bread
would cost about $2.86, assuming that inflation continues to
average 5.4%. In other words, your money will not go as far in
the future as it does today.
