Greg Herlean, founded Horizon Trust, which educates consumers on ways to manage their accounts.
Herlean has seen the retirement industry change considerably over the last two decades and people are nervous over the trends. In his article, he discusses four tectonic shifts and suggests ways to deal with them in your retirement planning.
First, he notes the decline in company pension plans. At one time, people depended on these schemes for their retirement income. This has all changed now. Employees themselves must plan for their retirement and are fully responsible for making the necessary contributions.
Stepping into the breach came the 401(k). The company often makes matching contributions, but this is not always the case. Meanwhile, some workers either do not have access to a 401(k) plan or simply cannot afford to support one.
In many minds, Social Security should make all this right. Unfortunately, the system is suffering from a chronic funding crisis. The latest reports suggest it will run out of money in 20 years. Even if Congress acts, there is a danger that cuts in payments may result. Sleepless nights uncounted have resulted from Social Security’s woes and the problem seems here to stay.
Herlean also points to the debt burden on Americans, particularly the younger generation. If you’re saddled with monthly interest payments, funding a retirement account can be hard. It’s as simple, and dire, as that.
What can one do? Herlean recommends first checking with your employer: if they offer a 401(k) plan, get into it. Even if you can only afford a tiny contribution at first, it’s a start. If no plan is on offer, there are many other options that have no minimum payment and any regular contribution to a retirement plan is a good step forward.
For more information, please read:
Planning For The Future: Four Changing Retirement Trends | Forbes