Many of us can remember a time when retiring was easy. Just hang up your hard hats, chalk, lab coats or any other tool of the trade and let your pension and social security carry you to the promised land… but that isn’t the case anymore. As life expectancies grew so did the financial burden pension plans put on companies. In the 80’s and 90’s companies started migrating to self-directed retirement plans, like 401(k)s.
In 2014 the Federal Reserve released a report on the economic wellbeing of U.S. households. In their study the Fed polled over 3,000 people of all ages about their retirement or their retirement planning. Unsurprisingly almost 75% of people 60+ who are not currently retired are expecting Social Security to help with expenses during retirement; of those same participants 29% expect to have a pension from work. Those numbers don’t change too dramatically for the 45-59 age band except 44% anticipate using a 401k in addition to their social security and possible pensions.
On the flipside only 20% of Millennials expect to be able to rely on social security and only 7% think they are going to get a pension. While the majority of this group expects to work full time until retirement, they also expect to not have to work again after retirement… but over 40% of people aged 19-29 don’t know how they are going to pay for their expenses in retirement.
What makes this all a little more jarring is that according to the Economic Policy Institute, after 30+ years of data the median working age couple has only saved $5,000 and the median couple close to retiring has only $17,000 saved. What might be even more shocking is that 70% of couples have less than $50,000 saved! $5,000 and even $50,000 can disappear quickly in an emergency.
This doesn’t just apply to those awaiting retirement, planning ahead and knowing your options can be key to being able to retire and stay happily retired.
All the best,
Wesley R. Nicholson, Mike Allen and Aaron Everdyke
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