Here’s the deal. There is a definite retirement savings crisis going on. There are several concrete factors contributing to said crisis, and that’s a fact. One of the main reasons cited by those discussing it is the lack of employer-sponsored plans, such as 401(k)s. Another reason lies in the budgets of individuals and families, especially those in middle to lower-income families, not having an extra dime to stash away—for anything.
It’s hard to negate the plight of those who just can’t afford to save, so, we won’t. It’s rough out there for many in today’s economy. If you don’t fall into that category, then you should be incredibly thankful. For real, and for everything; for every splurge you can indulge in; for simply having enough money to provide the necessities of your lives.
With that being said, let’s address those who complain that employers are responsible (in whole or in part) for this mess. While they may very well be right, we would like to present you with another thought.
Yes, it’s definitely a plus when employers offer cush retirement benefit packages—or any package, for that matter. Many large corporations and businesses that can afford it do. That keeps those people safe from the retirement savings crisis. But, the growing number of smaller businesses—the ones who provided two-thirds of all jobs last year—can’t afford to offer any benefits at all. We are lucky these places were able to create openings for workers in the first place. We shouldn’t complain that they don’t offer benefits. Right?
Right. Except, here’s the problem. One day, when all the baby boomers retire (as thousands are doing now, daily) and as the millennials follow suit—who’s going to take care of them if they can’t afford it? If you’ve got your finger on the pulse of the government and politics the answer is easy: you and me, us and we, the American people.
Whether through additional tax dollars and/or because we end up financing or housing the beloved retirees in our lives—we will pay. And, as you know, it’s one thing to happily care for our loved ones; it’s quite another if the economic burden of doing so for others impacts our own budgets and abilities to pursue the great American dream.
Yeah. It’s a problem…
This is why you should seriously consider not depending on others to help you reach successful retirement gains. Your employer doesn’t offer a plan? So what? Go out and open one of your own. You can do it. But, the key here is this—don’t wait until you’re in your 30s, 40s, or 50s. And, don’t teach your children to do that, either.
The IRS reports that only eight percent of those eligible to contribute to individual plans did so in the year 2010.
Eight percent? Really? (If you are part of the vast majority that didn’t contribute when you could have, raise your hand. Go ahead. No one can see you, anyway.)
Think about that, though. Most of those in our grandparents’ age brackets would never have dreamed of not saving for retirement. But, in the last few decades, that mindset has gotten lost in the shuffle of…well, of life. Life is equally soft and hard. It’s beautiful and at the same time exquisitely messy, blessedly predictable yet clearly unpredictable in many ways.
And, within the incredibly delicious chaos that is life, it’s easy to lose site of priorities—easy to put what’s not needed RIGHT NOW on the back burner. Unfortunately, planning for retirement now falls into that back-burner category. The younger set assumes they “have time” for that later. Because they don’t realize how quickly time flies the older we get. No one does until—BAM—there you are—you realize time really does fly and there’s no way to stop it or to turn back the clock.
Somehow the culture of encouraging our children to plan for retirement early in life has changed.
That is our point, the solution to the retirement crisis.
And, here’s what we need to do. Seriously. Now—today. We need to begin recreating the culture of retirement planning that begins early in life and is treated as an absolute necessity: one of those RIGHT NOW priorities that cannot wait. Because, if we don’t teach our younger generations to do this, what outcome will our children and grandchildren face? We’ll leave that thought right there, for you to determine for yourselves…
It’s called a retirement savings crisis because it is, and we are not negating that fact. It is a real problem for those currently in their 40s and 50s and even in their 60s who have not saved a dime. But, who’s to blame for that? Yeah, times are tough and many don’t make enough to put an extra buck or two aside. But, many people (92 percent of you) who could have afforded to save didn’t either, so how can you defend that?
Therein lies the problem and the problem is one not easily fixed for those quickly approaching retirement age. We may not be able to head off the current retirement saving crisis now, but the future solution lies in how we shape younger generations. An individual’s approach to retirement planning early on means the difference between retiring successfully and trying to scrape up retirement income in full-on crisis-management mode later in life. Which method would you choose if you could go back and give your younger-self advice?
We are prompting you to think beyond depending on employers to facilitate retirement accounts for you (or your children), because there are other options.
Not only do we have to change our way of doing things, we have to also change the mentality behind saving for retirement early on. It’s more than important. It’s critical. And it definitely should not be treated as a back-burner priority.
If you have questions about this article or want to learn how self-directed plans can build tax-sheltered income for retirement using alternative investments, please schedule your free consultation.