Retirement is changing in America.
A recent survey by the FINRA Investor Education Foundation found that these are the major sources of income of today’s retirees:
|Source of Income||% of Retirees Who Use This Source of|
Income for Living Expenses
|Social Security retirement payments|| 81%|
|Pension plan payments|| 63%|
|Withdrawals from savings|| 26%|
|Dividends or interest earnings on savings||23%|
|Income from employment || 17%|
Notice that 63 percent of today’s retirees are counting on pension plan payments to cover their living expenses, but only 21 percent of today’s workers are covered by a traditional pension plan, and the percentage is dropping every year.
At the same time, Social Security
is under tremendous financial pressure due to the impending retirement of the baby boomer generation. Thanks to the recession, 2010 is the first year in history that Social Security will pay more in benefits than it collects in taxes, and the Social Security Trust Fund is forecasted to be exhausted in just over 25 years.
Thus, it is clear that to have a financially secure retirement, today’s workers are going to need to save more on their own for retirement than did today’s retirees. As they enter retirement, they are going to need to figure out the best way to turn that retirement savings into a reliable retirement income.
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