Planning for retirement is never easy. It is sometimes intimidating and often confusing to know how much you will really require. Don’t worry though; staying informed of the current retirement trends can help you plan for your retirement with a little more confidence.
So, here are the current trends in retirement planning.
The Death of Pension Plans
Earlier, you could count on your pension to assist you and help you live through your retirement life. The more years you served in a company, typically, the higher your pension amount that you got to collect through retirement.
But as of 2013, only 24% of Fortune 500 companies provided pension plans, according to the Wall Street Journal. The number is on a decline today, and employees often have to contribute to their own funds.
State of 401(k) Plans
Some companies offer the 401(k) plan where employees can contribute for their retirement. If you are lucky, your employer may also match your contributions.
You can carry forward your contributions into another account when you quit a job.
But trends show that not all employees can contribute to their 401(k). Either their employers don’t offer it, or they live paycheck to paycheck with no room to save into a 401(k) plan.
Social Security Disaster
Many people depended on Social Security to pay through their retirement. But the Social Security Trust is set to dry up by 2037. The trust depends on taxes and covers only 76% of the participants.
It seems unlikely that taxes could fill the void and the participants may face cuts and reductions in the program.
The younger generation is carrying a huge burden of debt today. Individuals under the age of 35 have an average debt of $67,400 while people between the ages of 35 to 44 have an average debt of $133,100, according to a report by Money.
The debt can include student loans, business loan or other indebtedness and pose a threatening picture when it comes to retirement savings.
Is There A Way Out?
Check out if your employer offers a pension plan or 401(k). You should enroll as soon as possible even if you can only contribute a small amount each month. Things can turn out good especially if your employer matches your contribution.
If you don’t have access to 401(k), try to get some other retirement plans; some even come without minimum contributions.