A few weeks ago USA Today published an article that was a real eye-opener for those of us in the retirement field. The title spoke volumes. “Easy retirement?” it read. “Only for the privileged few.” No matter whether you’re retired or just beginning to plan, we suggest you click here to read this important analysis. It will give you something to think about!
The gist of the article is that, for most households, retirement is going to mean severe cuts in spending and a major change for the worse when it comes to lifestyle. The reason is simple, say financial experts: people aren’t saving enough. USA Today reports that just over one-third of people in their prime earning years or older have nothing saved for retirement and no access to a traditional pension. That’s based on data from the Federal Reserve. Even those households who have retirement savings on hand don’t have nearly enough: just over $73,000 is the average.
A generation ago, a much larger percentage of workers could rely on a traditional pension plan. These secure plans covered about 38 percent of workers as recently as 1979. Today that figure has been slashed by more than two-thirds – just 13 percent of workers have some form of pension today, and for most of those this “pension” is also tied to a 401(k) style program. These plans which require employee contribution and some degree of employee self-management of funds now make up 94 percent of all corporate retirement plans in America.
These paltry savings statistics for most average Americans stand in sharp contrast to the situation in America’s richest households. Among the top 10 percent, average retirement savings tops $400,000. This disparity, says USA Today, is creating a situation in the U.S. where “the gap widens between the few households who don’t have to worry about a comfortable retirement and everyone else.” Surveys have shown that anxiety over retirement not only knows no geographic boundaries but also covers all ends of the political spectrum. “Nearly equivalent percentages of Democrats and Republicans say they’re not managing very well in retirement planning, a recent survey from Lincoln Financial found.”
The root of the problem goes back in part to this shift away from company-sponsored retirement programs toward “a system that’s increasingly put workers in charge of saving for and managing their own retirement.” What’s more, it’s also related to wage stagnation. Most income gains over the past decade or so have gone to the wealthiest households who already have access to larger pools of retirement savings. According to USA Today, “experts say the gap in retirement savings is only growing wider. They’re expecting to see more elderly Americans working longer, moving in with their kids and tapping assistance programs.” Some of these state and local support programs will likely get more and more strapped for income.
We do feel the need to challenge one quote in the article that really grabbed our attention. It came from a labor economist and researcher who stated, “Only the privileged have access to a secure retirement.” Here at AgingOptions we would answer, “Not necessarily true.” You may not be able to afford to retire in the lap of luxury, but we believe with some solid planning and professional guidance just about anyone should be able to craft a retirement strategy that is secure and rewarding. The key lies in your plan – or as we call it, your LifePlan.
Over the years we have helped thousands of clients, seminar attendees and radio listeners – even those with modest resources – look at their retirement years with a fresh new perspective. We help people develop a LifePlan, which is a unique and comprehensive tool that takes all the critical aspects of retirement into account. Some people think that a financial plan alone is enough to guide them through their retirement years, but in our experience traditional financial planning all by itself can be a recipe for disaster for many retirees. Of course it’s important to be as financially secure as your resources will allow. But it’s just as important to decide how and where you would like to live, based on your health and circumstances. There are legal safeguards that must be put into place if your retirement plan is to be called complete. Your medical insurance needs have to be considered since your health will be the single greatest determining factor to decide how much you’ll be able to enjoy retirement. Finally, unless your family is informed and supportive of your wishes, regardless of whether your estate is large or small, you’re asking for trouble. Your LifePlan will help you here as well.
So if articles like this one from USA Today scare you, don’t feel paralyzed or helpless. Why not take a vitally important step and come to one of our free LifePlanning Seminars? Bring your questions and you’ll discover the power of solid retirement planning done the right way. You’ll find a listing of seminar dates, times and locations on our Upcoming Events page – then you can register online, or call our office. We’ll be glad to assist you. And if you know someone else – a family member or friend – who is worried, even fearful, about retirement, invite them to join you. We guarantee you’ll be very, very glad you did!
(originally reported at www.usatoday.com)
