One of the most dramatic changes in wealth management over the last 30 years has been in how we think of “retirement”. The traditional picture of the grey-haired couple on a beach has been replaced by one that in many cases is far less rosy. In an era of rising medical costs, higher taxes and especially increased longevity, there is a new paradigm for retirement that retirees now face.

Back when Social Security was first started in 1935, Americans lived to about 62 years of age. In the grip of the Great Depression, the program offered workers a lifeline, but only if they survived until age 65 when they would become eligible for benefits. In those days, many never lived to see a dime from Social Security.

Today, with the average life expectancy 79 years of age, Social Security is paying out far more than it ever was designed for. As more of the 76 million “Baby Boomers” retire, this problem will only get much worse. If retirees have any hope of collecting the benefits they’ve been promised, significant changes to Social Security will be necessary, and soon.

Another trend changing the face of retirement is that since the 1980’s, private company pensions have almost disappeared. With few guaranteed pensions from employers and the government’s own Social Security pension program in jeopardy, workers today are mostly “on their own” to prepare for retirement- mostly by contributing to 401K’s and similar retirement savings accounts.

Increased longevity in our retirement years also means that medical costs have ballooned as people survive much longer with the aid of expensive medical procedures and technology. Studies now show an “average” couple need over $250,000 in savings just for out-of-pocket medical expenses in retirement- even with Medicare! This figure does not even factor in the high cost for Long Term Care that is becoming a virtual certainty for most of us.

Of course, living longer also means more money is needed for everyday costs of living; like food, housing and entertainment. Whereas $1 million might have been a comfortable sum for retirement in the past, today that number no longer holds. Thus, many individuals are delaying retirement or planning on work as part of their retirement scenario. The problem here is that working as a senior is not always possible and health may not always allow it.

Now, consider this; a recent study showed that the “average” retirement account savings in the U.S. is just $5000. Even the top 10% of pre-retirement families had just $274,000 saved, on average. Ask yourself, who is going to take care of all these people?  The sad truth is that the government will never be able to provide for all the needs of so many ill-prepared people. A great reckoning is about to take place. All of which means that now more than ever, in the new retirement paradigm, it is mostly up to you.

Rich Jacobson is a Registered Representative offering Securities and Advisory Services through United Planners Financial Services, Member: FINRA, SIPC

The views expressed are those of the presenter and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Individual needs vary and require consideration of your unique objectives and financial situation.