Will
You Ever Be Able to Retire?
The
federal government and employers are shifting the duty of
retirement funding from themselves to workers. How will this
affect your future?
Back
in the Day...
Twenty-somethings often refer to their parents’ youthful
years as “back in the day”—and little do they
realize how much things have changed since then—economically,
socially, and politically. These changes impact every American,
but they are especially relevant to those beginning to think
about target retirement dates and whether they have saved
enough.
“Back
in the day” people worked long enough at one job that
they drew adequate pensions in retirement. The luckiest (or
most visionary) ones are the “triple dippers” who
collect a civil service or military pension, a pension from
years of working for a private company, and social security.
While
triple-dipping is an enviable way to fund retirement, at least
one dip of the trio is quickly disappearing: the company pension.
Only about 40% of the baby boom generation, just now beginning
to retire, will have any sort of pension, and the life-long
health insurance benefits that were once part of nearly every
retirement package are for the most part a thing of the past.
When
the government introduced IRA accounts in 1975, they seemed
like a great way for people to amass tax-deferred savings,
but they are strictly the responsibility of the individual.
You have to have the money, and you have to hope you’ve
found a good place to invest it.
Six years
later, 401K plans came along. With participating employers
contributing some matching funds, employees who participate
defer taxes on part of their income and get a literal pay
raise from the funds match. Once again, it sounds like a great
idea: So why are economists worried that America is facing
a retirement crisis?
To begin
with, only a little over half of employees who are offered
a 401K plan actually participate. Some cash out their plans
when they leave, often because they need the money for living
expenses while they look for another job, or they want to
pay ahead on debts they know they can’t handle if they
aren’t working.
While
some of the non-participants have IRA accounts or other individual
savings plans, an alarming 31% of workers 40 or older admit
that they have not saved anything at all for retirement, according
to a recent AARP Bulletin poll. The same poll revealed
that 28% of those who had already retired had
saved nothing! Like almost 60 percent of current retirees,
Social Security is their major source of income.
“But I still have my pension...right?”
Wrong.
Many companies have converted pension funds into 401Ks, expecting
employees who know little about the stock market to figure
out how to invest for their futures. Some companies simply
fund 401Ks with 100% company stock. Where does that leave
the employee if the company goes bankrupt—as Enron did,
leaving thousands of employees out of work and with shares
of company stock once valued at $80 worth less than a dollar?
Where Do You Stand?
If you
participate in an IRA or 401K, by all means keep doing so.
Don’t take out any “loans” on them. And remember
that according to the fed’s own web site, you should
expect Social Security to replace only about 40% of the income
you will need in retirement. The average couple on social
security receives about $20,000 annually from the government.
According to Bloomberg’s retirement calculator, this
couple needs an investment portfolio of an estimated $500,000
to make up the other 60% they need ($30,000) to bring them
up to a retirement income of $50,000 a year.
Maybe
this doesn’t worry you. Perhaps you are right on target.
Congratulations! You’re in the fortunate minority.
But--
more than half of all workers who are over 55 have saved less
than $50,000. That amount is almost insignificant. It
will generate only about $3000 a year—and that’s
assuming a 6% return and no unexpected nose-dives in the economy.
How did
people get into this fix? There are plenty of reasons. For
one thing, real wages have remained stagnant since the mid-1970s,
meaning that despite very hard work, many have needed every
penny just to get by. Poor spending habits—the desire
to have it all and have it now—have led others down the
road to debilitating debt. 401Ks and IRAs are accessible (although
you pay taxes and a penalty). People borrow to pay for college
and medical expenses, and somehow the money never gets paid
back to the retirement fund.
Is
retirement security a luxury you can’t afford?
With
an uncertain economy, skyrocketing healthcare and energy costs,
and little help from employers, retirement may seem like an
impossibility to you.
It
doesn’t have to be that way.
We are
living longer and longer. Must we spend our retirement years
filled with anxiety about outliving our money? Will we just
have to keep working forever?
It
doesn’t have to be that way.
Even
if you are approaching retirement age with little in the way
of savings, there is still time to make up for the shortfall,
relax, and enjoy the rest of your life.
It’s
all in your hands. But you must be willing to take control
of your finances and turn your life around.
As
we said at the beginning of this article, the responsibility
for retirement income is yours now. The government will help
you out a little bit, but you need to find a way to earn about
60% of what you will need.
There
IS a way.
Even
if you must stay home to take care of an ailing spouse or
aged parent, there IS a way. There is a business
you can run from your home, your RV, your vacation cottage,
even a lounge chair on a sunny beach. Technological advances
in the past few decades have made it all possible, and it’s
working incredibly well for thousands of people. To establish
a viable business that will produce income now and for years
to come, all you need is an Internet connection and a telephone.
Skilled professionals who took back their lives will be happy
to teach you the simple secrets of their success.
Why haven’t
you heard about this before? If you had, you’d be ahead
of the game. But the important thing is that you know about
it now, and the sooner you act, the sooner you can begin
to free yourself from anxiety about how to finance your retirement.
In fact, you can look forward to enjoying the rest of your
life as you live out your best years in the security of ever-increasing
wealth.
Take the first step now.
Fill out the form below for free, no-obligation information.
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