Retirement planning was simple then. They worked 30 years. They retired. They received a small pension and probably social security. That was their retirement plan. Generations before us had defined pension plans with defined benefits through their employment.
But times have changed. Today many people’s retirement saving options appear in the form of a 401(k) plan or 403(b) plan. And they must contribute an appropriate amount and choose a suitable investment. Other workers, such as contract employees or those who are self-employed, face the retirement savings issues completely on their own. But all share a common factor; they are directly responsible for saving now in order to have financial security in their retirement years.
Never has the need for personal saving been more important. This need is amplified by the future financial situation of Medicare and Social Security says Dr. Paul McNamara from University of Illinois Extension. These programs face enormous challenges as Baby Boomers begin to reach the age of qualifying for benefits. The sheer number of Boomers in combination with the growing expense of medical services and the increase in life expectancy will create public pressure to limit benefits or find other ways to hold down costs. Boomers may be required to pay for some services out of their own pocket. So the private savings portion of a retiree’s financial plan will be more important.
What can you do today to help you get on track in your savings? Make a financial plan and take concrete steps to start saving for retirement. Even if you can’t save a lot of money each month, every little bit will help. Even small amounts each month can have a big impact on your total savings years from now when you need it. Be sure to estimate whether your current savings pattern will get you to where you want to be financially in retirement. Let this estimate be your guide in identifying what you need to be doing now with your savings.
The Plan Well, Retire Well: Your how-to guide website (www.RetireWell.uiuc.edu) developed by the University of Illinois Extension Consumer and Family Economics Team provides straight-forward information and learning exercises to help you take control of your retirement savings and investing. The interactive site has won awards for innovative design. Users appreciate the research-based information that is not associated with any products.
Do yourself a favor and visit the website. What you learn will pay off in the future. And share the web site with the young people in your life. They will benefit from learning early about planning for their retirement.
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Source: Paul McNamara, Extension Specialist in Health and Consumer Economics
Department of Agricultural and Consumer Economics
University of Illinois
(277-333-3769)
Edited by: Lois Smith (618-692-9434)
