Ask anyone about the retirement outlook for the majority of Americans, and most of your answers will probably be to the effect of, “It’s pretty bleak.” A 2016 survey conducted by financial firm Allianz found that more than 60 percent of baby boomers actually fear running out of savings in retirement more than they fear death. That’s a pretty serious sentiment. Though individually, some workers have established the financial security they need to retire well, as a whole, our country is struggling—and these trends facing our retirement futures are to blame.
Trend 1: There’s a retirement savings gap.
Baby boomers, Gen X-ers and millennials are all about equally worried about having enough money to cover their life expenses in retirement (55 percent, 57 percent and 47 percent, respectively, according to the 2017 Annual Transamerica Retirement Survey), and rightfully so. Traditionally, it has been said that you will need about $1 million to retire comfortably; however, accounting for inflation and modern lifestyles, experts are now suggesting to save more than that. The gap exists here: Baby boomers have an estimated median of $164,000 saved for retirement, Gen X-ers have an estimated median $72,000 saved, and millennials have an estimated median $37,000 saved currently.
Trend 2: Government help is tenuous.
In 2017, the U.S. Government Accountability Office prepared a report on the state of the nation’s retirement and has since urged Congress to revamp the way the United States supports its retirees. By 2035, the Social Security system will no longer be able to offer Americans the full benefits that previous generations have become accustomed to unless a solution is established before then. In addition, the cost of Medicaid is already predicted to rise over the next few decades. If Medicaid’s long-term care program is cut any further, it will place an even bigger strain on individuals and their families, which in turn will affect the national economy as a whole.
Trend 3: Employer-sponsored retirement plans are becoming fewer and farther between.
The traditional pension is no longer a staple offering for today’s working Americans. More companies are now offering 401(k) plans, which require you to contribute part of your paycheck, often in exchange for an employer match. That’s all well and good, but only if employees are contributing, and many are still not saving enough, if at all. In addition, the “gig economy,” which refers to the fact that a significant number of today’s workers are now opting for multiple freelance jobs rather than one steady career, leaves employer-sponsored plans out of the question for this group of workers.
So what can we do about these trends facing our retirement futures?
From a government standpoint, the Government Accountability Office has already suggested that Congress work on promoting universal access to a retirement savings plan. Until that happens, however, it’s up to the individual to save smartly. That includes having a retirement savings plan in place, whether or not you are being offered one by your employer. Saving smartly also means budgeting a portion of every paycheck toward both your short- and long-term savings.
Another smart way to guarantee your financial security in retirement is to do just that—get a guarantee that your money will be protected from market loss while growing at the same time. At Ty J. Young Inc., we can help you do just that. If you want your money in risk-protected investments, but you still want to enjoy stock market gains, the Ty J. Young Inc. team can help. Call us today at 877-912-1919, and continue to follow Ty J. Young Inc.’s Retirement You Earned blog!