You may have heard the retirement terminology “three-legged stool” used to describe the three most common sources of retirement income: Social Security, employer sponsored retirement plan and personal savings. Many factors affect the strength of each “leg,” so you must continually evaluate what changes you need to make to keep the stool strong and upright.
Unfortunately with recent events such as business downsizing, flat-lined pay, deflated property values, turbulent stock market performance and increasing health care costs, the wealth of America has taken a bit of a hit. Couple these events with employers implementing cost-cutting measures and the increased human lifespan and it doesn’t take long to determine that the three-legged stool starts leaning, looking more like stilts, or even worse, a pogo stick.
Recent studies about employee retirement readiness indicate that in large part, individuals are not prepared for retirement. According to Employee Benefit Research Institute’s latest Retirement Confidence Survey conducted in March of this year, only 14 percent of American workers are “very confident” that they will have enough money to live comfortably in retirement, an unfortunate historic low. Financial Finesse, the nation’s leading provider of workplace financial wellness programs, announced that as of June 30, 2012, 51 percent of employees do not have an emergency fund in place and 33 percent indicated not having a handle on their cash flow.
While we are seeing indications that individuals are attempting to move in the right direction to be financially prepared for retirement, in most situations, the effort is not enough to counter the late start to saving or the long-term economic challenges that are requiring employees to save significantly more than in previous decades. Part of the issue remains that most employees are not in a position to be able to save sufficiently for retirement unless they change their day-to-day spending habits, which is why we might not see employees making more dramatic improvements to their preparedness despite the recent short-term economic improvements.
Since economists expect increases in health care expenses, taxes, inflation and life expectancy, coupled with decreases in government and corporate retirement benefits, is all lost? No. What should you do if you haven’t planned your financial future? Just start. There are many resources available, including the Retirement Financial Calculators on our site, that are available to assist you in designing a plan for retirement readiness. If you have started – great. Continue to assess your goal and your current process, as all the factors affecting your pursuit are constantly changing.
Ohio Retirement Financial Planning
Are you prepared for retirement? Saving what you need to, or just hoping for the best? If your not sure, take time to explore the Retirement Financial Calculators mentioned above. They’ll give you an idea of where you are and where you need to be. How do you get from here to there? Contact Rea & Associates. Our Ohio CPAs are more than tax and accounting specialists, they’re true business and financial advisers, working with you to meet your long-term financial goals. We help individuals plan for their personal financial futures and also assist businesses in retirement plan design and administer. Our Ohio Retirement Plan Services team offers a full range of benefit plan administrative services.