Retirement, riding off into the sunset and into your golden years! How the landscape has changed over the generations. Many in the Baby Boomer generation had pensions, lifetime employer-provided health insurance, and confidence in social security checks.
Fast forward to 2020. For many Boomers who are still working and younger generations, the responsibility for saving for retirement falls on our shoulders. According to the Social Security Administration from 1990 through 2008, private wage and salaried works covered by defined benefit pensions fell from 38% to 20%. The future of this style of plans is stark, as many defined benefit pension plans are now frozen and not admitting new employees to participate in the plans.
In addition, many are concerned about the financial well-being of the Social Security program. Many projections forecast this program running out of money in 2035 (or sooner). It is firmly believed that the Social Security program will continue, even as funds are depleted, but it will not look the same. Many options are on the table: reduced benefits, longer retirement eligibility, increases in taxes, or means testing.
Again, with the certainty provided by Social Security and pensions now a thing of the past, it is up to us to take charge of our own retirement. The time to start is NOW! Action is the first step of this process. Make assumptions about your retirement needs and how can you accumulate funds in them by a set retirement date in the future. According to Fidelity, they recommend saving at least 15% of your PRE-tax income.
Next, the investment possibilities are endless, and we recommend working with a qualified Financial Planner to map out your plan. Which leaves a BIG question… what is the “right” account to save in? We will explore tax deferred retirement account, tax free options, and alternatives to retirement savings accounts all month, and encourage you to return to learn more.