Sustainable Retirement In The United States
A sustainable and relatively comfortable retirement can be defined by having ample retirement funds that won't get depleted before you pass on
. While there are many opportunities for the young worker to accumulate adequate funds to retire on, many are unlikely to choose an exact retirement age, or feel confident that their retirement funds will be enough. The Melbourne Mercer Global Pension Index, which ranks international pension plans based on these two factors, says that the United States isn't in the best shape in terms of pension. There are a number of components that stops the country's retirement system from improving.
There is an expected decrease in the rate of productive workers versus the country's population. Social Security also warns that the program will reach a point where more people are taking money from it, compared to people putting money in. Government debt also plays a large part in how programs such as these work - if federal debt is too high, the certainty of benefits for low-income workers can be compromised.
People who have pension plans may understand the problems that result from inadequate funding: the potential inability of their pensions to give them proper benefits. Many have stuck to the same employer for a long time, such as a person's entire working career, to get the benefits promised to a loyal employee. However, since many pensions don't have the financial capability to distribute benefits, some providers wish to give up the responsibility.
Alternatives to pension plans, such as the 401K, aren't giving the employee and future retiree much better options. The Melbourne Mercer Global Pension Index has even stated that this component of the country's retirement system is one of the most flawed. One of the main reasons behind this rating is 401K's inability to match the employee's contributions. Since the economic downturn, companies could no longer match the worker's payments. Aside from participating employees, plan investors also suffered as well.
Depending on two of the supposed ramparts of the United States' retirement system, Social Security and 401K, for the bulk of your retirement funds can leave you high and dry when you retire. Whether you're a young worker who's a decade away from retirement, or a senior employee with retirement on the horizon, finding other sources of stable income to augment what you can get from these programs is necessary. Otherwise, a financially troubled, stressful retirement may await you.
by: Carina Smith
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