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Retirement: Yesterday, Today, and Tomorrow

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04/01/2011 - It's safe to say that your retirement will bear little resemblance to that of your grandparents – and even your parents. The world has changed so much in the past 20 years that even the savviest prognosticators couldn't have predicted all changes in society and technology that have transformed our daily lives. We now know there is no turning back from the life to which we've become accustomed, but it begs the question: What's next?

Planning for the unknown

Think about those planning retirement in 1991 – the year the World Wide Web was introduced. There was no internet service in homes, few people had cell phones and many considered cable TV and health club memberships luxuries. Now, 20 years later, as those people prepare to retire, these items alone can take a considerable bite out of their budgets. Add escalating health care, gas and oil prices to the mix and the nest egg that seemed adequate may now fall short.

We've also seen medical advancements over the past two decades that have allowed Americans to live longer, more active lives. While this is good news, it will also put additional strain on retirement budgets.

Those planning retirement 20 years ago were also unaware of the realities facing Social Security today. It was an expectation that the program would fund a portion of most retirements. However, with the Congressional Budget Office reporting in January of 2011 that the program will run a $547 billion deficit over the next 10 years, Social Security's future is uncertain.

Preparing for the future

If we only could look into a crystal ball and see the future, planning for retirement in 20 or 30 years would be much easier. Unfortunately, we don't have that luxury. Here's what we can do:

• Plan for new technologies. Odds are, progress will come with a price. Plan dollars in your retirement budget for items that will make the world operate faster and more efficiently.

• Plan to live a long time. There is a good chance that you and your partner will live longer lives than the generation before you. That's why most financial advisors now recommend that clients plan for a 30 year retirement. With life expectancies on the rise, it's probably safe to assume that number will increase down the road.

• Plan for inflation. While increases in the cost of living have been modest for the past several years, that trend will likely end soon. Experts predict that an inflationary period may follow in an economic cycle like we are currently experiencing.

• Plan to live without Social Security. With the government funded program spending more on benefits than it receives in revenue, its demise is almost certain unless the program is revamped. Planning retirement without Social Security will take the uncertainty out of your future.

Taking matters into your own hands

Having realistic expectations about future retirement income needs is the first step in securing your future. The next step is to take matters into your own hands and start saving for the day when work becomes optional. If the idea seems daunting, you don't have to do it alone. Your financial advisor can help you develop a plan to reach your goals in retirement, and feel more confident along the way.

Try to close your eyes and imagine what realities we'll face 20 or 30 years from now. It's fun to dream, but it's also possible to turn those dreams into a realistic plan for the future if you start now.


[Insert advisor's biography]. Advisor is licensed/registered to do business with U.S. residents only in the states of [Insert the state(s) the advisor is licensed in].

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.

© 2011 Ameriprise Financial, Inc. All rights reserved.

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