Avoiding a Pension Time Bomb by Robin Trimingham
I read a pretty sobering article on msn today entitled “A pensions time bomb spells disaster for the US economy”. You can click on the link to read the article in full; in general, the writer highlights the fact that US government pensions are estimated to be underfunded by about $1.3 trillion and that it is unlikely that there will be an easy way to recover this shortfall.
In practical terms, this means that the baby boomer generation is about to exit the workforce in such large numbers that they will effectively drain (if not bankrupt) the US pension scheme, leaving future generations without pensions even though they are paying into the mandatory plan every month. To make matters worse, some people are compounding the problem by trying to take their pensions as early as possible to make sure that they “get theirs” while there still is some to get.
This is a shocking state of affairs that is likely not fixable even if the government raises the mandatory retirement age to 70 or reduces payouts, and some commentators believe that, as things currently stand, the pension plan could be “flat broke in a little over ten years”.
Whether this bleak prediction proves to be true or not, there is little doubt that everyone needs to wake up and start saving for retirement like never before.
Advances in healthcare have extended everyone’s life expectancy which ironically just compounds this financial dilemma because you will need to be prepared to provide for yourself for more years than ever before once you are too old to work.
Whether you are twenty-five, forty-five, or fifty-five you need to sharpen your pencil and figure out how to save more and strategize how you might manage to live a comfortable retirement on a lot less than you were counting on, for more years than you were counting on.
As daunting as this task sounds, it can be done. If you are not sure where to start, check out our new e-Book “Money Tips for Your Third Journey” for tips and strategies to set you on the right financial path now and in the future.
By Robin Trimingham