why 65 is no longer the perfect age for retirement by Norma Goldman Jackson   Find out more about the Free Will Baptist Board of Retirement at www.boardofretirement.com.

For those nearing 65, the traditional age for retirement, the finish line appears to be moving! An additional two to five years in the workforce might well be the best solution for making ends meet in retirement. Even those in higher income brackets will still need to make adjustments and tough choices. What can these additional years on the job mean to retirement earnings? Increases in Social Security benefits, beefed up savings accounts, and firm steps to reign in spending are at least three important results.

Despite shrinking numbers of Americans in low-income brackets and growing numbers in the middle and upper economic strata, several important factors have created the need for drastic changes in retirement planning.

Health Costs

When retirement plans and goals were formulated several years ago, many people did not accurately assess future health costs. For example, long-term health care costs increase significantly if potential retirees wait until their 60s to purchase coverage. Few potential retirees expect to find themselves with an expensive health condition. Yet illnesses such as diabetes, respiratory problems, or chronic kidney failure create the need for supplemental insurance to cover the difference between what the primary carrier provides and actual costs of care.

While health care in the United States continues to be the envy of the world, drug costs have skyrocketed over the past five to 10 years creating huge strains on retiree budgets. Predicting what those costs will look like in another decade is a real brain twister.

One of the single most critical decisions facing retirees is what medical insurance will be available in retirement? Will my employer allow me to remain covered under the company plan? Will my benefits be reduced? What kinds of supplemental coverage will be available, and can I afford it?

Dramatic Increases in the Cost of Living

Similarly, increased fuel costs impact virtually every area of American life. The costs of driving, home heating and cooling, groceries, and even public transportation are at the highest levels in recent memory, taking a huge toll on family budgets. With an impact so widespread, it’s tough to hold the line on spending.

Decreased Earnings from Retirement Funds

After age 50, it becomes harder to make up for earnings shortfalls. When savings or investment earnings fail to reach expectations, there are few options beyond working longer. Recent upheavals in the stock market, coupled with downturns in real estate mean taking a serious new look at dwindling anticipated retirement income.

AARP reports that in 2008, 28% of Americans have postponed plans to retire, 17% have returned to work (or are looking for work), and at least 12% have had to postpone paying bills (AARP Bulletin). These are hard choices.

Declining Value of Homes

If retirement plans call for downsizing, selling existing property, and moving into something more affordable, you may be in for a surprise. Huge real estate gains of the early 2000s have all but evaporated, leaving homeowners in a much less favorable position. Depending on your location, homes valued at $200,000 in 2007 may be worth less than $160,000 today. If you were counting on sale proceeds to purchase a retirement home, you may need to rethink your plan.

These realities make it critical to stick to the 5 retirement basics:

1. Build a plan that provides at least 80% of your working income.

2. Eliminate outstanding debts, including your home mortgage.

3. Pay for automobiles.

4. Find a retirement home that fits your family, lifestyle, and health needs.

5. A transition plan from an active work life to an active retirement.

Having these basics in place before retirement will definitely decrease the strain on your budget (and you) post-retirement! Prayerfully consider all these basics before establishing a firm retirement date.

About the Writer: Former magazine editor Norma J. Goldman enjoys a freelance writing career in her retirement. If you have questions for Norma, email retirement@nafwb.org. For more information on retirement options, visit www.boardofretirement.com.