Who will fund your retirement?
Written by Lynda Calver on June 14, 2015.
Traditionally, a US senior citizen’s retirement income has come from a trio of sources: a pension, personal savings and Social Security. However, according to the official Social Security Administration website, increasing numbers of American retirees are finding themselves reduced to depending solely on the latter. With the average person’s Social Security payments totalling under $16,000 per year, it is clear that there is an abyss opening up between the needs of this demographic, and their ability to pay for them.
A number of factors have contributed to this lamentable state of affairs including the erosion of company pension schemes, a shift in demographics with a lower ratio of workers to retirees, people living longer due to medical advances and the subprime crisis which caused property values to plummet affecting a large number of people planning on using the equity in their property to fund their retirement. This is not just a problem limited to America. Throughout the Western world there are millions of people with a retirement shortfall.
For those approaching retirement without sufficient funds, the options are limited. Some politicians argue that the solution is to work longer, perhaps up to the age of 70, which gives individuals extra years to contribute to their pension plan, and reduces the time they will need to draw down on retirement savings. However, putting aside the moral question of whether this is fair, for some, particularly those with physically demanding jobs, this is not a possibility.
Hell might well freeze over before Congress finds the solution to this thorny issue, especially given the budget constraints faced and the poor fiscal health of the country in general. It is clear that US citizens cannot rely solely on the US state to provide them with a comfortable retirement. As Senator Susan Collins, Ranking Member of the US Senate Special Committee on Aging, has remarked ‘I think we need to look at … how we can encourage people to save more for their own retirements’.
I couldn’t have put it better myself! Saving for your retirement, whatever your age and wherever in the world you come from (the US is far from alone with its problems in this regard), has become imperative in the 21st century and if you are not already doing this, I suggest that you start right away. A professional financial consultant will be invaluable in helping you work out your requirements and putting together a plan to help you achieve your goals and secure yourself a retirement free of money worries.