This week’s CBTV show is entitled, “Columbus Day to Today: How Retirement Has Changed Since 1492!”
According to Financial Finesse, a leading provider of financial education programs, their 2010 Year in Review, found that 82% of employees are paying their bills on time, and 51% are paying off their credit card balances in full. That’s the good news from a company that provides financial education programs to over 500,000 employees, from more than 300 corporations, municipalities and credit unions across the country. The bad news, according to their newest study released September 14th, is that only 14% of those employees were on target to reach their retirement income goals. They also reported that nearly 4 out of 5 Americans have still not determined how much money they will need to have saved, to afford the retirement they were hoping for.
Without proper financial planning and implementation, the age that people will be able to retire will continue to rise. The Employee Benefit Research Institute, discussed this very topic during their 68th policy forum held in Washington, DC, on May 12th. The theme for this conference was, “Is There a Future for Retirement?” EBRI’s discussions focused on baby boomers and Generation Xers, many of whom would not have adequate income to cover their basic retirement expenses and uninsured medical costs, even if they delayed retirement until they were past the age of 65. According to the Institute’s Research Director, Jack VanDerhei, continuing to participate in a defined-contribution plan, like a 401(k) past age 65, can make at least a 10 percentage point difference, in determining whether or not an individual has adequate retirement savings. And a 10% increase in your nest egg can go a long way in making your money last in retirement.
The biggest issue pre-retirees are facing today, is uncertainty. This uncertainty may be due to: fear that their pension may not be there when they retire, or that their Social Security benefits will be reduced, or having lost so much money in the stock market recently, that they will not have enough savings to get them through their retirement years. Whatever the reason, those approaching retirement are losing confidence in their ability to afford a comfortable retirement. The landscape for retirement has significantly changed, since the creation of Social Security, over 75 years ago. Before that time, retirement in this country was widely seen as a means of getting aging factory workers out of the workforce. However, it wasn’t until the government instituted the Social Security program, in 1935, that offered these older workers a financial benefit to retire, in the form of a monthly Social Security check.
Raising the retirement age is one solution being discussed by Congress right now, to solve the problem of rising Social Security, Medicare and Medicaid costs. The average life expectancy in 1935, when Social Security was established, was 65 years, as of 2010 it’s 78.3 years. In addition, pensions and other employee benefit programs have become much too expensive to maintain for many companies, so benefits must be cut. The changing financial landscape of retirement is forcing people to take more responsibility for their future finances. Retirement, at least as we’ve known it in years past, has officially “retired,” and now, unless you take matters into your own hands, the future of your retirement, remains unknown. Nobody wants to revert back to the industrial age, when people literally worked until they died. While many Americans have relied on the government or their employer in the past, the only one you can truly count on to fund your retirement, is you.
So, whether we like it or not, each of us will have to become fully responsible for our own financial success or failure in life. And the earlier we take our financial destiny into our own hands, the better.
I would like to hear your thoughts on this week’s show. What is your plan of action to financially secure your future? Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
-Matt
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