Tuesday, 29 January 2019

Your Wealth Management Plan

"Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples." If you agree with George Burns, then you really do not need a retirement wealth management plan. Working until the end of your life is certainly an option. It is just not the option most of us want to exercise. If you are among the majority of Americans who do not plan to work in retirement, then you need a retirement wealth management plan. The annual Retirement Confidence Survey (RCS) is a comprehensive study of the attitudes and behaviors of American workers and retirees towards all aspects of saving, retirement planning, and long-term financial security. A 2001 RCS published by the Employee Benefit Research Institute (EBRI), American Savings Education Council (ASEC) and Mathew Greenwald & Associates found that the largest source of retirement income for current retirees is as follows: 

  • Social Security
  • Employer-sponsored plans
  • Personal savings
  • Other government income
  • Sale of home or business
  • Employment
  • Support from children/family
  • Other 

The fate of Social Security still remains to be seen. Americans are living fourteen years longer than when Social Security was created, and life expectancies are on the rise. This puts a tremendous strain on the system. If Social Security were forced to make payment cutbacks or if it fails altogether - what will the 42% of current retirees who rely on it, as their largest source of retirement income, do to survive? The second largest source of retirement income for current retirees is employer sponsored plans. The sad fact is that no pension plan is completely secure. United Airlines just joined the growing number of companies defaulting on their pension plans. Pension defaults are not just confined to the airline industry -most companies in the steel industry have already defaulted on their pensions. There is great speculation that the automotive sector (including both automotive manufactures and automotive suppliers) will be the next to default on their pension plans. Again, what will the 23% of current retirees who rely on employer sponsored plans as their largest source of retirement income do to survive? The key to survival, whether your pension fund defaults or Social Security fails, is to develop a retirement wealth management plan. The first step in the creation of your retirement wealth management plan is to check your current retirement status using a retirement calculator. You can run multiple retirement scenarios using the retirement calculator - such as what your retirement looks like without your pension plan. The next step is to educate yourself about finance and investing. You should read finance magazines, newspapers and web sites. Attendance of financial classes is another great option. You can also check the course offerings at your local college. The bottom line - do not rely on a company or the government to provide your retirement - you must take an active role in securing your own retirement. It all starts with your retirement wealth management plan. 

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