It may not be obvious, but we have a retirement problem in this country and the economic crisis created by the efforts to combat COVID have exposed it. Not enough people have enough saved for retirement. The economic conditions that began back in the early Spring have forced many older workers into forced retirements that they were not fully prepared for. For those younger workers who suddenly found themselves on unemployment, there aren’t enough jobs that offer strong retirement benefits or high enough wages to allow them to look beyond the survival necessities (i.e. rent, food, gas, etc.). Demographics and class also play a role in whether people have the opportunities to save for retirement. While there are a lot of tools available today for anyone to save for retirement, the tools are not the issue. The issue is that fewer people have wiggle room financially to save enough for retirement. Most people with hefty retirement accounts either had jobs that paid well or spent years working for big companies that offered strong benefits. For many in the gig economy or working for small businesses, the opportunities to save and the benefits of things like matching contributions or stock ownership plans are just not there. And yes, there are more working in the gig economy or small businesses than many of us realize. So what’s the solution? Well, there was recent legislation passed that makes it much easier for small businesses to band together and offer retirement benefits as well as pushes back the age for requirement minimum distributions (RMDs). However, we may need to have a larger discussion about how we go about saving for retirement after these current economic conditions improve, particularly about pay and the cost of living in this country. There may also need to be further reform of the tools that we have, making them easier to use and understand. We will see what the future brings regarding all this.
You can’t predict the future. You can plan and save all you want, but one emergency or unexpected issue can derail your retirement plans pretty quickly. This isn’t meant to scare you, but rather to get you thinking about the unexpected and how to take the steps to help prepare yourself. One of the easiest ways to prepare for sudden emergencies is to have a plan in place. You should have plans set for your physical, mental, and financial health in retirement. Taking the time to discuss and set those plans into writing can help to avoid problems, keep your mind at ease, and make sure you are well cared for during your retirement years. You may also want to review your finances and take steps to either consolidate your money (if you have multiple retirement accounts) or to know where you will take money from in certain situations (i.e. medical expenses, living expenses, etc.). While nobody can predict what the future holds, you can take action now to help blunt any potential issues or emergencies.