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Wednesday April 24, 2019


 Retirement isn’t nearly as scary as many people would have you believe. 

Although retirement is often referred to as your golden years, many people think it will be anything but relaxing. The good news is that you can change your situation, even if you think it's too late. Here's what you need to know about where things stand, and what you could do about it.

The U.S. Census Bureau data shows that the average retirement age in the United States comes to about age 63. Age 63, however, would be considered an early retirement age as far as how your Social Security and Medicare benefits work.

One indicator of retirement behaviour that abstracts from more general factors affecting the level of participation rates is the average effective age at which older workers withdraw from the labour force – for the sake of brevity, this will be referred to as the effective age of retirement. In most countries, the effective age of retirement is well below the normal for receiving a full old-age pension. Japan and Korea are notable exceptions where the effective age of retirement is close to 70 for men despite a normal retirement age of 60. In other countries, men on average are still in the workforce at age 65 in Denmark, Iceland, Ireland, Portugal and Switzerland, but have left work by their 60th birthday in Austria, Belgium, France, Hungary, Luxembourg and the Slovak Republic. Women, in general, retire around one to two years earlier than men.

Women tend to accumulate smaller retirement funds due to two main factors, adds Paspiech. Studies show women earn 83 cents for every dollar a man earns, although the gap is closing. Also, “women tend to interrupt their employment to accommodate roles as family caregivers.” This means, on average, women work fewer hours, reducing potential pension benefits.

Middle-class couple in their mid-30s would need to hunker down and put away a couple of million bucks to retire comfortably. That would require them to save a third of their incomes every year.

The next stage occurs in your late 40s and 50s. You wave goodbye to your kids and burn your mortgage. Suddenly, you feel a lot richer – and that’s because you are. Your available cash flow has just leaped from 40% of your gross pay to 70%.

Your retirement solution is simple. Live frugally, spend your money sensibly, don’t cheat yourself out of things you need while you’re raising a family, and get out of debt fast. 

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