海角大神

Here鈥檚 a number for you. Half of all babies born in the United States this year will live to . In other words, when a person from that generation hits the typical 鈥渞etirement age鈥� of 65, they鈥檒l still have 40 years of life left.

Obviously, this represents a major change from where we鈥檙e at now.

At age 65, people will have 40% of their life yet to lead. In other words, 65 will become the new 40.

Social Security cannot support everyone having forty years of retirement. It will have to drastically change or go bankrupt. There is no other option. The only way to prepare for this is to assume that Social Security simply won鈥檛 be there when you reach retirement age.

Few people will want to 鈥渞etire鈥� at age sixty five. If 65 is the new 40, people aren鈥檛 going to want to retire then. They鈥檙e going to want to keep having active, productive lives for many, many years to come after 65.

Thus, the age range for retirement savings will become much longer. People will start targeting their retirement savings to age 80 or 85. Money put into such savings at age 25 will have 55 to 60 years to grow.

When I look at my children, I recognize that these are the facts that their lives are going to hold. How exactly will they plan for the future? What will their lifelong financial trajectory look like? Here are a few elements I see coming down the pike 鈥� and they鈥檙e certainly going be a part of the advice I give to my children.

First of all, their first career probably won鈥檛 be their only career. The idea of the 鈥渟econd career鈥� is slowly becoming more and more mainstream as people reach 鈥渞etirement鈥� and realize they don鈥檛 want to retire. As people鈥檚 life spans continue to extend, the idea of a second career will become pretty normal. I expect that many people will work hard at a lucrative 鈥渇irst career鈥� and then move on to a pesonal passion for a 鈥渟econd career鈥� once their major life expenses (a home, children) are taken care of.

What does that mean? Don鈥檛 give up on your dreams just because you can鈥檛 do them right now. Master living on less than you make so that down the road you can do absolutely whatever you want with your time. Spend your time picking up lots of transferable skills 鈥� public speaking, communication skills, time management skills 鈥� that will help you in whatever direction your road goes.

Second, retirement planning will move to an even longer scale. Right now, many people calculate their retirement starting at 25 or 30 and ending at 65. The numbers become quite a bit different if you start at 25 or 30 and end at 80. The advantage of starting early becomes even more profound and people won鈥檛 have to put away as much each month to hit their numbers.

For example, let鈥檚 say you need to have $8 million to retire. You start saving at age 25 for that and you鈥檙e putting it in an investment that earns 8% a year.

If you鈥檙e retiring at age 65, you need to put away $2,400 a month.

If you鈥檙e retiring at age 80, you need to put away only $725 a month.

A longer life span means that you can get away with saving a lot less per month for retirement. The power of compound interest is amazing.

Finally, don鈥檛 bank on the government to save you. I offer this advice to everyone out there still in the workforce. Social Security in its current form is unmaintainable. The numbers do not add up. At some point, it is going to have to be radically changed or it is going to have to disappear.

Account for your retirement without Social Security in the equation at all and you鈥檒l find yourself much more secure and happy at retirement time.

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