Retirement Savings : Saving Solutions

Younger generations think they have plenty of time to plan and retirement seems too far in the distance future. But the earlier they begin saving for retirement, the more financially stable they will be at retirement age. Saving a little over a longer time accruing interest over the persons working years would develop into a nice retirement nest egg. Youth today will need to work harder at saving, in comparison to their grandparents and even their parents, due to economic factors and because social security and pensions lack reliability.

Even if you are just starting a new job or are unemployed right now, it is best to start early and start thinking of retirement. Why? Mainly because saving for retirement right now is becoming more complex and your bank savings with the small interest you receive annually might not be enough to fit your lifestyle when you're thinking about drinking a margarita on a beach when you're 80 years old.

Most Americans don't really know how much they'll need to save before they can comfortably retire, and in fact almost a third of adults haven't even started! Many people hesitate because they don't know where to begin, but don't think they can afford to save money every month. Nelson & Associates, an accounting firm in La Crosse, knows how intimidating the market can be, which is why they're here with a few personal financing tips anyone can follow.

More than 75% of Americans population do not have enough saved to cover six months’ expenses, and this arises because of job loss or an unexpected life event. The number of Baby Boomers that leaving the workforce is growing and the aggregate saving rate is expected to fall even further, even if household saving behaviour remains the same.

Watching this documentary put into perspective just truly how difficult retirement saving is in today’s times. “Half of all Americans say they can’t afford to save for retirement” (Retirement Gamble). With such as vast amount of citizens being unable to save funds, the workplace is continually being filled up with older individuals. This, in turn, leaves less room for the younger aged working force who is seeking out new job openings. Also, pensions are almost solely a thing of the past, “In 1970, 42% of all Americans had a pension” (Retirement Gamble). Employers are no longer able to provide such benefits, as we have started to live longer and the wage demands have steadily increased as well. Instead, many companies have turned to 401 k plans to help workers plan for retirement. This system encourages the employee to directly invest into their

A) Based on FASB.org, there are two types of retirement pension plans that are employer-sponsored: defined-contribution plan and defined-benefit plan. The different benefits of these plans show if an employee or an employer has risks in reference with the investment of funds. They also change the costs for each plan.

Millennials realize the importance of saving for retirement, because unlike previous generations, the threat of not having social security to rely on is very real to them. They have experienced first-hand the ramifications of bad spending habits and have witnessed the

Another of the concerns that Louis, Joyce, and Bryan have is they would like a retirement program that will shelter a substantial portion of their income from taxes. Of the myriad of choices, a company has for retirement plans, the best tax shelter for the owners is the qualified retirement plan. With the qualified retirement plan Louis, Joyce, and Bryan would be able to eliminate any current tax hit on a substantial portion of their income and be able to grow tax-free in a trust that they manage.

An example of a type of retirement plan is, the EBRI. They have been conducting Research since it’s founding in 1978. Funding, Capital Markets, Program Coverage, and Participation in income adequacy is a tool used for Retirement Plans. There are many different types of Retirement Plans. Such as Defined Benefit Plans, Defined Contribution and Participant Behavior Programs, and Individual Accounts. There are even ways to protect your plan. Such as Retirement Security Projection Model. Which is used to model the expected income derived from such things as Social Security, Gender, and Family Status.

The change in savings behavior has resulted in an overall improvement in the retirement readiness of America, increasing the number of people who are projected to be able to meet the essential expenses, such as health care and food, in retirement from 38% in 2013 to 45 % in 2015. However, this still means that over half of Americans are at risk of being unprepared to cover the basic living expenses in retirement (Saad-Lessler, Ghilarducci & Bahn, 2011).

For most Americans, retirement has become a lifelong goal. To retire comfortably, you need income, and this income can come from one of three sources: savings, Social Security, or a company pension plan. The unfortunate fact is that Americans save very little money nowadays, and for anyone under forty, Social Security is a very hollow promise. For most, private pensions are the key to a comfortable retirement. When it comes to private pensions, however, most companies and employees themselves don’t contribute enough money, meaning that future retirees will have to work longer if they want to maintain their pre-retirement standard of liv¬ing into retirement.

McKinsey & Co. performed a financial survey constituting 12000 households that show 83% of the Canadians are well able to maintain their standard of living even after they stop working. The survey consisted of 9000 working households, and 3000 retired households. The survey shows the advantages of traditional defined benefit (DB) pension plans which allows a guaranteed level of income in retirement showing that 91% percent of mid to high income Canadians with a DB plan are well on track to maintain their previous standard of living.

The assignment being completed by the author of this paper asks the author to take half a million euros and take one of two general strategies with the money. The first strategy is to invest in a pension with a life insurance company and have that be the income that pays a pension the rest of one's life and the other is to self-manage and invest the money whilst taking annual withdrawals to pay bills and otherwise live one's life. Both options will be explored but a firm choice shall be made between the two in the content of this report.

It has almost been three years since I have been employed at my first and current job. I am currently employed at a financial group in the Springfield/ greater Hartford area. More specifically, my branch focuses on managing participants retirement portfolio as well as developing the technology to manage and optimize such extensive portfolios. As a result of being employed here, I have interacted with senior partners and experienced employees whom briefly taught the importance and benefits of saving early. With this brief knowledge, I set out to further develop my knowledge and hopefully help those my age to build a future for them so that they retire comfortably. Through this, I will be researching possible financial strategies current college students may use to save for retirement.

For those Millennials who are entering the workforce, there is a pressure on paying off high amounts of debt and lacking the knowledge to make smart investment decisions. An article by Larson, Eastman, and Bock (2016) explains that Millennials entering the workforce are presented with difficult financial decisions. They also could possibly make financial mistakes during this time that could be costly for their future (Larson et al., 2016). Millennials may not be able to depend on pensions or Social Security to fund retirement so the importance of saving is crucial during their younger years. They found from prior research that there are differences in how the millennials view investment decisions compared to other generations. They were more risk adverse and conservative than others and this could by why they are not wanting to save for retirement. The lack of knowledge about investment decisions could also by why they are not saving enough during their working years. Older generations keep their savings in cash and less in stocks and most millennials do not carry much cash and some are risk adverse to keep their cash in stocks. Through their three studies, they tried to understand the relationship of financial knowledge and risk on retirement investment decisions. After their study, they found that millennials chose highly conservative retirement plans and those individuals had low degrees of knowledge about finance. Also, their findings showed