It’s the perfect storm: social security has one foot out the door and pension funds are all but dead. Regardless of what happens in Washington, how do you know you won’t become the victim of crumbling social security and a nonexistent retirement plan?
Can I Depend On Social Security?
All of us know social security is in trouble.
We also know that no one in Congress wants to do anything about it. They don’t want to be the person who took away everyone’s social security payments. Who really wants to do that?
But, if we continue on as we are now, social security funds will be depleted by 2034.
If we get to that point, it’s likely everyone will see at least a 25% cut in benefits across the board. We probably won't go that long without something changing, but so far, we have no idea what that will look like.
To add to the problem, pensions, which were once a staple of retirement plans, have been nearly, if not completely dead, since the 1980s.
Why Don't I Have A Pension?
If you, like most normal people, aren’t familiar with the history of pensions, here’s a quick synopsis. In the past, most American workers who had jobs with benefits had a pension plan. Pension plans were great because it was guaranteed income when you entered retirement that didn’t require you to invest your own money or really risk anything at all. You just had to stay at your job. Sounds great, right?
But in the 70’s there was a shift from pension plans to 401ks, as they were much cheaper for companies. In the long term, the pension plans weren’t sustainable, so Employers began to push for their employees to invest money in a 401k retirement plan.
The problem for the worker was they had to go from knowing they had income available to putting their own money away. They had to actively save and invest wisely. With a pension, it didn’t matter if you saved or invested, you would always have that money available.
Since the shift to 401ks, less people are equipped for retirement.
We have an entire generation of people ready to retire who have saved exclusively with 401ks. With social security’s decline on top of that, your retirement could be in jeopardy.
Show Me The Money!
There are two articles I recently read about the the problems those nearing retirement are facing now.
The first one was from the Wall Street Journal, and it was a debate between two experts about whether there is and or is not currently a retirement savings crisis in our country. It’s an informative read that will help you see both sides of the argument.
The second was from The Atlantic and painted a picture of what life without retirement savings may look like for you. It’s bleak, but the message is important. You’ll want to make sure you read this one!
If you don’t have time to read those now, here’s some the key statistics from both articles:
- Social security will be depleted by 2034.
- Poverty fell for populations 18 to 65 but rose for those over 65, meaning the only group whose poverty level has risen is those in or near retirement.
2/3rds of Americans don’t contribute anything to a 401k or other retirement plan.
- For those 55 to 64, the median savings in their 401k is only $15,000.
The data shows that there are a growing number of people who will NOT be able to retire comfortably, if at all.
I Don’t Think I Can Retire. What Do I Do?
It’s my job to make sure you’re prepared and able to achieve your dreams for the future. I want you, your parents and your children to be in a healthy place financially with a plan to retire.
So many people come into my office every day and are convinced they’re never going to be able to retire. However, there are very few situations that we’re not able to salvage together.
Out of the hundreds of people I’ve helped in my career, there are only two cases I can think of that were truly hopeless.
The first was an older couple well into retirement. The husband was the only one who worked and he handled all the financials for their family. He had a large chunk of money given to a 10 year payout. He bought into the program thinking by the end of the 10 years, they’d have another way to make money or would have enough saved up to continue living the way they wanted.
Unfortunately, they were less than 3 years away from the end of the payout, but they had no money saved and the husband was no longer able to work due to his health. They had absolutely no money available for them and they had no options to get out of their situation.
The second couple was a bit younger with a large amount of money. They lived comfortably, had multiple timeshares and properties, but weren’t generating enough income to pay for everything.
After looking at their financials, I saw that they could have enough money to live on after retirement but only if they made great changes to their lifestyle, including selling their extra properties. It was obvious that if they didn’t make those changes, they would be out of money in a few years.
They broke down crying in my office and decided they weren’t willing to make the changes they needed. So I, unfortunately, wasn’t able to help them.
Okay, Now I’m Really Scared
I’m not trying to scare you. I’m trying to prepare you.
These are the absolute worst case scenarios. The vast majority of people can make the changes necessary to ensure they’re prepared for retirement regardless of their current situation.
If you’ve never made a retirement plan, you need to as soon as possible. You want to make sure it is flexible that you’re confident will be able to provide you the financial security that you need. If you don’t know how to how to make your plan, come by my office for a free consultation. We’ll look over every aspect of your financial world, create an income plan and make sure you’ll be able to retire with confidence.