| 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 for free, no-obligation information. Sincerely,
Mirjam McAngus
1-800-879-5831
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