Not as it is needed, or will be appreciated, but for everyone living the life of a Boomer, and those poor souls that have to follow our act, here’s something to add to your list of worries … inflation.
In this article in the Washington Post, you can read all about how your well-considered plans for financial comfort in your old age can be way out of whack.
When calculating how much you’ll need to continue to see to your own support, did you base at least some of your decisions on how long-lived your parents are/were? Good for you! But … the advice now is to tack at least another five years on to your total for medical advances that are expected to add half a decade or more to the count in the future.
Then there’s the fact that a dollar today won’t be worth a dollar tomorrow … that inflation thing mentioned earlier. To get an idea of what we may be looking toward, let’s take a look back. For example, a person retiring in 1976 on a pension of $40,000 per year … a darned good pension in those days … would have had the buying power of $142,800 in the first year of retirement, seen that drop to $80,000 by 1987, and by the age of 95 in 2006 would be trying to live on $40,000 a year.
Retire today on $100,000 per year and watch your buying power slide as your wrinkles … and needs for medical care … multiply.
Those of us so fortunate as to have our aging parents depending on us at the same time little kids need college educations set-aside for, padding pension plans may not be easy, and working more years to offset retirement demands might also be difficult.
Like the author of the WaPo article says, her mother’s 94th birthday is “both wonderful and worrying.”
Wonderful because she’s still in reasonably good physical shape and mentally alert, and because I enjoy having her around. But worrying when I think about the implications for my own financial security in retirement.
If our parents didn’t plan well enough, we might be covering their expenses. Given that the cost of senior housing alone can run over $100,000 per year, and residential care close to $50,000 even that hefty 1976 pension your folks may have set up falls short in 2007.
Adoption fees being what they are, our savings may have taken a hit or two … or ten … in the process and left less than we thought we would have. Now that it seems kids are no longer expected to work their way through college, most parents assume that having enough put away for at least a four-year full ride is an obligation. With the costs of that over 30 grand this year, and rising all the time, a couple of kids in mortarboards will take a big chunk out of the retirement account.
Being really bad with numbers and hopeless when it comes to finance, putting together a post like this is a practice in headache development for me, but I thought I should pass along the link and get folks thinking.
Sorry about that.
Photo “Seychelles Rupees” ©2007SHBenoiton