Tag Archive | "frightening facts about retirement savings"

Retirement Is A Dream For Most Americans

Pension plans are – for most of us – a thing of the past. 401(k) plans are a disaster. The Federal government is making nasty noises about cuts to Medicare and Social Security. Sometimes is seems like government and big business are conspiring so that retirement is a dream for most Americans.

Retirement is a dream for most Americans.

Retirement is a dream for most Americans

With pension plans a distant memory, most of us — if we have any retirement savings at all — have money in a 401(k). But there’s a big problem with that and it’s virtually ensuring that most Americans will never have enough to retire.

The fact is, that it’s easy to take money out of your 401(k). Sure, there’s a penalty and you have to pay taxes on the money you withdraw, but when you need it, you need it and your 401(k) is a handy stash.

A large and growing share of American workers are tapping their retirement savings accounts for nonretirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age.

More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs, and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.

And now, as the Federal government attempts to get its fiscal house in order, we hear rumors of cuts to Medicare and Social Security.

With policy makers eyeing cuts to Social Security benefits and Medicare to rein in the soaring federal deficit, and traditional pensions in long decline, retirement savings experts say the drain from the accounts has dire implications for future retirees.

‘‘We’re going from bad to worse,’’ said Diane Oakley, executive director of the National Institute on Retirement Security. ‘‘Already, fewer private-sector workers have access to stable pension plans. And the savings in individual retirement savings accounts like 401(k) plans — which already are severely underfunded — continue to leak out at a high rate.’’

The fact is that the interests of working Americans have never been truly served — with very few exceptions — by big business or government and now it looks as though retirement is a dream for most Americans.

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Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Saving for Retirement, The EconomyComments (0)

Frightening Facts About Retirement Savings

If you’re concerned about having enough money for retirement, you should be. Although it’s recovering, the US economy is still a mess and world events could easily trigger another recession.

It’s tempting to bury your head in the sand and hope for the best. Don’t do it. Frightening facts about retirement savings should motivate you to accelerate your retirement plans.

Frightening facts about retirement savings

Here are just a few sobering facts that may cause you to reevaluate what you’re doing to plan for retirement.

  • A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover medical expenses throughout retirement.
  • Just 14% of American workers are very confident they will have enough money to live comfortably in retirement.
  • Only 16% of American workers are very confident that their investments will grow in value.
  • For a low earner retiring at 62 — Social Security replaces 40% of pre-retirement earnings. This is unlikely to provide for a comfortable retirement.
  • Nearly 75% of retirees have not saved enough and said they would save more if they could do it all over again.
  • More than one-third of all households end up with no employee-sponsored retirement plan at all during their entire work lives and others, who move in and out of coverage, end up with inadequate 401(k) balances.
  • 60% of workers report that their total household savings and investments, excluding the value of their home and any defined benefit pension, is less than $25,000.

There is no doubt the financial situation is serious. For many of us there’s simply little or no time left to plan and invest for our “golden years.” We have to make do with what we have. Frightening facts about retirement savings should be a wake up call for all of us to do what we can — now.

Click here to read more frightening facts about retirement savings.

Posted in Planning for Your Retirement, Retirement Plan Challenges, The EconomyComments (0)

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