A recent ThinkAdvisor article covered a new white paper study on the effects of wellness on income planning.
The reporter addressed the impact of improved health on retirement income needs, and ways younger workers can plan for a healthier retirement.
But the white paper referenced ― which came from HealthyCapital and the Insured Retirement Institute (IRI) ― highlights much more significant and urgent matters: The study shows that more than three of every 10 current retirees would like to change their financial situation, and that the number of retirees declaring bankruptcy has increased by 250% in the last 25 years!
Since the early 1980s, the landscape has shifted, from employers offering workers a defined pension plan to employers providing defined contribution retirement plans. Workers have had to learn how to save for their retirement on the fly.
In addition, according to a 2017 Pew Charitable Trust study based on Census Bureau survey data, about 35% of private companies offer neither a pension nor a contribution plan.
A report on the Bureau of Labor Statistics 2015 National Compensation Survey shows that about half of the private companies offering a 401(k) plan have a match of 0%.
Take a moment and let that sink in.
For every 100 companies in the private sector, 35 offer no defined retirement plan and about 14 offer a defined pension. That leaves 51 companies. Twenty five of those 51 companies do not contribute 1 cent to their employees’ retirement.
Welcome to the 21st Century YOYO Retirement Plan ― also known as, “You’re on Your OWN!”
The Annuity Solution
All of this means that working Boomers and Gen Xers need to get a handle on their retirement by taking steps now.
Of course, it makes sense for 30-year-old workers to develop long-term retirement plans, but the imminent and drastic need for action is for those in their 50s and above.
The ThinkAdvisor article spoke of the need for a hypothetical client, Susan, to buy a couple of annuities 30 years down the road. While that makes sense, the purchase of annuities for soon-to-be retirees makes even more sense, never mind the ads placed by some so-called experts.