America’s Retirement Planning Crisis
The current state of retirement planning in this country is best summed up as disastrous! The extreme lack of care and confidence is directly caused by an extreme lack of retirement planning – both on the employer and employee level. Take a look at the recent 2016 “Retirement Confidence Survey” by the Employee Benefits Research Institute and Greenwald & Associates:
Why are Americans so desperately feeling they’ll retire later if at all? It’s the disappearance of the defined benefit plan without sufficient education and assistance in promoting and explaining the defined contribution plan.
Put simply, the days of the big pensions are long gone. We rarely see retirement planning clients with them now, and when we do it’s usually a government or state employee of some sort. Without the nice pension income, employees are left to plunder their own retirement. Unfortunately they haven’t been adequately taught how to do it!
Retirement planning with defined contributions
That’s not to say workers today CAN’T effectively create their own retirement. When it comes down to it the monies which went into defined benefit plans (and aren’t now) are being passed on to workers in some percentage for them to save into dc plans (like their 401k or 457). So workers are getting paid a bit more, but at the sacrifice of forcing them to save for their retirement (because now they have the option to spend it and before they didn’t).
This is and will be a continuing crisis. The new reality is workers are living longer and longer, they will need more and more sums of money to retire. On top of that they should expect to retire later and later. They’re not educated enough (on a broad scale), and it’s a selfish “me first” society it seems, so they’re not willing to sacrifice now for retirement later.
I remember that commercial “I’d like to buy the world a coke” (I dated myself there). If I could buy the world a coke, I’d rather teach the world how to plan for retirement – on their own, without any help! The fact is that retirement planning education would go much farther for society than the coke!