My Golden Years Are Beginning to Look More like Silver or Copper Years

For many of my age group (those of us in our early to mid-30s) it's difficult to find many aspects of retirement planning besides time that is on our side. This can make planning for our golden years, even for those who are motivated and educated enough to do so, a challenging and at times a depressing prospect.

It isn't that my retirement dreams have been crushed, but they just aren't as bright or as lustrous as they once appeared. Sometimes I compare my retirement plan to the financial version of the Titanic, although I'm not sure this is a favorable analogy. Anyway, I've built my portfolio to survive multiple financial compartments being flooded, but should too many compartments be flooded at once, she'll start to founder -- and lately, this is what has begun to happen.

It has taken the iceberg of the financial crisis to set in motion a situation in which financial compartments such as social security, the real estate market, healthcare, and the job market, begin spilling over into one other, setting off a sort of chain reaction. It's a perfect storm of sorts, striking many portfolios, investments, and income streams, making it hard to contemplate a retirement future as bright as it once appeared.

Here are my takes on some of the factors that are combining to make my retirement difficult to plan for either due to their instability or unpredictability.

Social Security

I've mentioned in previous articles that I often try not to count on social security for much in the way of my retirement income. However, it's hard to ignore that it's there and at least contemplate how it may affect or factor into my retirement. It could make a significant impact one way or the other upon my retirement plans, either due to its presence or its absence, and with at least 30 years to go until I would be able to claim any sort of payments from the system, in the meantime, there could be massive changes in the way the social security system is handled, funded or administered.

At this point, the Social Security Administration is predicting that it will only be able to pay 76 cents on the dollar on benefits starting in 2037. The way things are going with the economy, I wouldn't be surprised to see this date move forward if things don't pick up soon. With the first year I'm eligible to retire being 2041 (I'd be 62 years old and receiving reduced benefits), I will already be receiving less than I'm being told in my social security statements each year. I wouldn't be eligible for full payments until age 67, and with talk about pushing the retirement age higher, I could be waiting even longer to claim benefits that might come at a fraction of the value of what the Social Security Administration is currently predicting for me.

Real Estate

With the purchase of our first house in 2008, and the subsequent putting of this house back on the market last year at a significantly lesser amount than we bought it for (there are numerous decisions for our reason to do so that I won't go into now), my wife and I are looking at a big hit to our personal finances. This hit is so big that it could factor into our retirement planning, even though our retirement is decades away. And since our plans don't entail reinvesting in another home, which if we did might at least provide a chance for recouping our losses down the road (if or when the real estate market recovers) we are simply out our losses. It's a significant blow to our forward financial progress and could extend our need to continue working by at least several years.

Healthcare Costs

I read just the other day in an article by Emily Brandon for U.S. News and World Report that the out-of-pocket medical costs in retirement for a man retiring in 2020 was predicted to be between $111,000 and $354,000, while for a woman it would be $147,000 and $406,000. While I'm sure these numbers will hinge upon a ton of variables, I'm not banking on them going down between 2020 and when I plan to retire somewhere between 2040 and 2050.

As you can see however, there is a huge difference between the high end and low end of these estimates. The nearly quarter of a million dollar difference could make a huge impact upon when I retire and the amount of money I need to retire. While in my opinion it's always good to plan for the worst and hope for the best, any way I take these numbers are frightening to say the least, and definitely make me wonder just how much health related costs will sap from my finances during retirement.

More from this contributor:

Estate Planning: Getting My Affairs in Order

Retirement Questions I Ask Myself for the Beginning of the End

3 Television Shows that Are Entertaining and Might Make Me Money Too

Sources:

Brandon, Emily. Retiree couple medical tab: $158,000. 7 January, 2011. http://money.msn.com/health-and-life-insurance/retiree-couple-medical-tab-158000-dollars-usnews.aspx . 7 January, 2011

Disclaimer:

The author is not a licensed financial or retirement professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is at the reader's discretion.