Some ideas to help you start feeling better about your "retirement" outlook.
WASHINGTON, D.C. (Texas Insider Report) — We all know saving money for retirement is vital. Although planning for life after work is known and often talked about, many Americans lately are growing increasingly concerned about their retirement savings. In fact, a recent study found that 79% of Americans believe there is a retirement crisis, up 12% from 2020.
Additionally, more than half of Americans are worried that they won’t – or cannot – achieve financial security in retirement.
Since FDR was President, nearly every American citizen has paid into Social Security with the understanding that they too will eventually reap those benefits. Sadly, the future of Social Security is precarious at best.
The most recent Social Security & Medicare Board of Trustees Report found that full benefits of the program will only be available for roughly the next 11 years. Looking further into the future, the Social Security Board of Trustees forecasts that the Trust Funds everyone’s taxes feed into will be depleted by 2041 – unless current law is changed.
Unfortunately, the federal government – and too many politicians from both political parties – appear to use Social Security as a political talking point during elections and punt the issue down the proverbial field for future leaders to address.
While this reality may be daunting, the private sector offers solutions to the government’s inaction.
For example, Prudential recently launched Prudential SimplyIncome – a new single-premium immediate annuity (meaning it allows you to use a lump sum of your assets to purchase a guaranteed "retirement paycheck") created to address growing demand among consumers for a workplace retirement plan option that will convert participants’ retirement savings into a protected stream of income.
Last month, BlackRock similarly announced its new LifePath Paycheck program which provides access to guaranteed income through a target date fund, an “investment strategy that adjusts to a targeted retirement year.” The unique difference between traditional target-date funds in 401(k) plans and the LifePath Paycheck is that the funds start to invest in annuity contracts at the age of 55, with the allocation growing to roughly 30% of the portfolio by the age of 65.
As has been reported by Wall Street Journal, “An employee has from age 59.5 until the year they turn 72 to buy an annuity with that allocation, locking in a monthly paycheck for life. The remaining 70% can remain invested in stocks and bonds or be redeemed for cash.” Should an employee choose not to buy an annuity, the 30% allocation would act in a similar manner to the fixed-income allocation in standard target date funds.
When announcing the program, the Global Head of LifePath at BlackRock, Nick Nefouse, said “BlackRock pioneered the first target date fund over thirty years ago – and LifePath Paycheck represents the next phase of BlackRock’s leadership in retirement. We continue to develop innovative solutions for Americans that are affordable, easy to use, and can provide more economic security to retirees.”
It’s important that private companies continue to create retirement solutions that individuals can take advantage of, as we all know we cannot rely on the government to build our nest egg. But, even with companies creating innovative solutions that make saving for retirement easier, it’s beneficial to work with a financial advisor to ensure the golden years remain golden.
In fact, simply having a financial advisor is one of Charles Schwab’s main recommendations for safeguarding your retirement savings. In looking at data from their Preferred Choice Retirement Accounts (PCRA), Schwab found that plan participants who work with financial advisors had an average balance of nearly twice as much as those held by non-advised participants. PCRAs are a self-directed brokerage account offered within defined contribution retirement plans, which are just retirement plans the employee and/or the employer contribute.
The biggest benefit of having and working with a financial advisor is to relieve some of the stress associated with working towards a large financial goal like retirement.
Some employers offer financial advisors as a benefit package, and a lot of major banks offer free tools for their customers.
Although many Americans are worried about life after retirement, there are a plethora of private sector options at customers’ disposal that can facilitate savings – and a brighter future.
Finding and speaking with a financial adviser to explore one of the solutions laid out above, as well as others, will help you start feeling better about your "retirement" outlook.
Do not rely on the government to secure your finances.
