Retirement Crisis
A span of economic turmoil has left majority of the population nearing retirement to be financially insecure. Over a period of time, the income has not kept pace with the inflation rate.
Benefits are on the decline and high paying jobs are scarce. Planning for retirement as a well as a financially secure future has become a priority.
The dynamics of the free market and capitalism are such that they are leaving a positive impact only on a segment of the population.
With medical insurance becoming mandatory, the healthcare revenue cycle may become stringent for the average American. The treatment expense is expected to rise within the next few years. In a nutshell, the competition for survival has never been stiffer.
The conditions have forced many to dip into their savings and retirement funds, which is not a wise ploy. Premature usage of funds is a poorly enacted short-term strategy.
According to information available from the Employee Benefit Research Institute (ERBI), at least 1/3rd of the labor force in US expects to retire after the age of 70. 2/3rd of the population crossing 65 works part-time. So, the figure of people retiring after the age of 65 has risen by 15% during the last decade.
In light of this situation, an important figure to note is that 60% of the people nearing retirement have a saving amount of less than $25,000. This indicates how woefully underprepared they are.
This shows there is a need for adequately defined benefit plans. Among the 14% of the population that are prepared for retirement have done so by opting for investment options, or are those that are in high paying positions.
Many analysts are of the opinion that the 401(k) based retirement financing schemes are not sufficient and overly dependent on stock market investment. People are now looking for ways to maximize their pensions for retirement.
The US government has invested around $80 billion in the 401(k) based retirement accounts. The problem with this form of retirement benefits is that they mostly favor the high earning bracket.
For instance, those that earn around the $200,000 mark contribute 15% for savings. In the end, they get additional $7,000. In the same context, those with the income bracket of $20,000 and contributing the same percentage would get nothing. The reason is that they don’t earn enough to qualify for it.
In a similar extension of stats, data from the Federal Reserve shows that 53% of American population aged 30 or more are vastly unprepared for their retirement. On the other hand, there is a lot of diversity now with retirement benefits, so one should be careful with what they select.
In light of all this adversity, it is important to be smart with your personal finance. Make calculated decisions, and take investment risk with a higher winning proportion. Online trading tips can also help for successful investment ventures.
While on one hand, the cost of living may have gone high, the tools of affordable living have also emerged.
It’s possible to consume less energy in your homes via efficient appliances that cut down on your bills.
The idea is to be aware of what you are consuming, and what type of smart earning options you have based on your skills. Training yourself in personal finance wouldn’t be a bad option.