A study shows that about a quarter of 18–40-year-olds in the US (Millennials and Gen Z), believe that social security might not be available to supplement their income when they retire. *
This is also followed by the fact that many speculate that the fund will run out of money by 2033.
The reason?
Well, people are living longer and there are just too many people claiming state pensions. The fund cannot sustain the drain on its resources. In the past, pensions would be claimed for around 20 years, but these days pension pay outs could last 25-35 years. That’s almost double.
This alarming reality is not just a warning in the US, but in many countries offering social security old age pensions.
Professionals must rely more on other pensions and consider social old age pensions a supplement or bonus to their main pensions. In the past, company pensions were the main source of income for professionals at retirement. Since the phasing out of defined benefits schemes, they are looking more and more to private pension plans.
An added concern from the study was the average retirement age that each of the generations wanted to retire at.
Baby Boomers 68.8
Gen X 63.2
Millennials 61.3
Gen Z 62.5
Apart from Baby Boomers, these are quite low considering the average state retirement age is around 67. This retirement age goal puts strain on an individual’s retirement savings as they would have to save even more to be able to retire comfortably at the desired age.
A possible solution for retirement, is a private pension plan that an individual can control and monitor. It is a plan that they can contribute towards that will last their entire working career, unlike work pensions that get started and ended as jobs change.
Strive for stability and consistency in your retirement planning, and you could have the kind of retirement lifestyle you want at the age you want.
How to potentially increase your chances for the retirement lifestyle you desire
- Consult with a financial adviser to draw up a retirement plan factoring in your current savings, your retirement goals, your future contributions, and have regular annual meets to check in on the progress and adjust accordingly.
- Consider consolidating all your work pensions into one place where you can control how they are to be invested to receive better returns.
- Invest in a private pension plan to supplement your retirement plans and goals.
- Diversify your investments to mitigate risk and grow your money.
- This could include investing in different sectors, economic regions, and asset classes.
- Keep your retirement contributions ahead of inflation by increasing it annually, otherwise its spending power will diminish over time.
- Look for ways to constantly increase your retirement savings – increasing contributions when you get an increase, or once off contributions when you get a bonus or inherit money.
It is advisable to meet with your financial adviser to get your retirement goals on track. info@devere-group.com
*https://news.northwesternmutual.com/planning-and-progress-2020
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.
** No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.