The new reality is that retirement is not an age, it is a financial number.
PlanGap policies address the concern when a change in retirement income disrupts retirement plans. Instead of retirement and relaxation, many Baby Boomers worry about bankruptcy. More than 12 percent of those who file for bankruptcy protection are over the age of 65. This alarming statistic indicates a six-fold increase from 2 percent in 1991.
Take a look at this recent news story from NBC Channel 5 about the growing problem of seniors struggling financially:
According to a 2017 Legg Mason survey, Americans born between 1946 and 1964 need twice as much money to retire comfortably.
To retire comfortably, retirees should have saved approximately $658,000. For many seniors, achieving that level of savings is almost impossible. Average savings for today’s seniors are approximately $263,000. A major cause for the savings gap comes from the financial hit that Americans took during the recession of 2008 and 2009. Many investments were down significantly at the time of their retirement.
Adding to the dilemma, employer-based and governmental programs for retirees continue to dwindle.
Government programs, such as Medicare, Social Security and VA benefits, are designed to supplement retirement savings. This begs the question, will your personal savings be enough for you to live off of for the rest of your life?
Dwindling Benefit Programs Cause Income Gaps
Over the years, defined benefit pension programs have effectively been eliminated from employer offerings. Overall 401(k) contributions / match-levels from employers are decreasing and creating larger gaps in retirement income planning. Out-of-pocket expenses for healthcare are on the rise. Even the Social Security Administration may not be able to keep 100% of their promises. In fact, there is now a clause on Social Security statements indicating potential benefit reductions in the years ahead.
The figures associated with Social Security funding are stark. The bottom line is that the Social Security retirement program’s Trust Fund is on track to run out of money by 2034.
Today’s 56 million recipients of Social Security currently receive $3 in benefits for every dollar paid into the system. Without improvements to the program’s balance sheet by 2034, the Social Security Administration projects a 23% benefit reduction in benefit payments.
The original idea of Social Security was to supplement personal savings and pension plans. Yet, many pensions have failed over the last few decades. The new realization is that seniors today are unable to pay the bills with Social Security alone. Unfortunately, a Social Security benefit reduction of 23% could mean the poverty-level of American senior citizens will reach alarming heights.
Lack of proper funding for aging demographics creates a capital imbalance we must address.
How can we solve this issue?
A recent AARP Survey indicates that seniors have low confidence that savings and Social Security will cover living expenses.
Guardian Life created this worksheet to determine if your sources of income are enough to live a comfortable lifestyle during retirement.
Social Security Administration has built a great website (my Social Security) to see personalized estimates of future benefits based on your real earnings, see your latest Statement, and review your earnings history.
AMAC provides a great breakdown for you to see how prepared you are for retirement.
PlanGap.com describes PlanGap ™ Retirement Insurance and how disruptions in retirement income can be caused by many factors, but broken promises made by the government or an employer are a cause American seniors need to protect themselves against. The Plan Gap Annuity can help you protect your Social Security benefits from government mandated reductions.
What would you suggest to seniors that are struggling to live with dignity during their golden years?
Kate writes about retirement benefits for retirementinsurance.org. She has a Masters Degree in Social Work (MSW). She has over a decade of experience in assisting elderly and disabled populations navigate governmental and private programs to obtain the monetary assistance they need to lead better lives. As she watched her parents begin their own retirement journeys and navigate similar systems to obtain Social Security, Medicare and other retirement benefits, she gleaned a further personal knowledge about the topic and is eager to share what she has learned with others.