INDUSTRY INSIGHT
YOUR FINANCES
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THIS ISN ’ T YOUR GRANDPARENTS ’ RETIREMENT !
I grew up in the Pittsburgh area , and several of my relatives worked in the steel mills . My grandfather worked his entire life at National Tube in McKeesport after serving in the Army . My grandmother was a trailblazer and owned a personal care home for the elderly until she sold it to my uncle at retirement . They retired at age 65 with my grandfather ’ s U . S . Steel pension and Social Security for both . They lived on that income alone for the rest of their lives . This is a story I have heard many times about people of that generation , especially in the Pittsburgh area . Retirement was not so complex , and people were able to rely on their employers and the government to fund it .
In the early 1980s , average life expectancy in the United States was age 73 . By 2020 , that number had risen to age 78 . 1 ( The pandemic brought it back down some , but that is likely temporary .) In 1983 , pension ( defined benefit ) plans maxed out at more than 175,000 . As of 2019 , there were less than 47,000 . During the same time , defined contribution ( 401 ( k ), 403 ( b ), etc .) plans increased from 200,000 to almost 700,000 today . Pensions are generally funded by employers , whereas defined contribution plans are mostly funded by employees and partially by employers that contribute matches and / or profit sharing .
Source : Form 5500 filings with the U . S . Department of Labor
Retirement today looks very little like it did in the 1980s . People are living on average five years longer , and companies are not funding nearly as much of employees ’ retirements . We also have fears that Social Security may go bankrupt or be forced to change significantly . People are more likely to work during retirement years today as well . In 2018 , 9.1 million people over age 65 were still employed in the United States . That was a 60 % increase from the prior decade ! 2 So what can we do about all of this to ensure a successful and enjoyable retirement for ourselves ?
We see five major steps that can be taken to secure your retirement .
1 . Make sure you have a plan ! It is never too early to start planning for retirement . We help our clients by developing customized plans for them that account for all aspects of their financial lives — retirement income planning ; investment management ; education funding ; life , disability , and long-term care insurance ; tax planning ; estate planning ; charitable giving and more . Make sure to monitor your progress at least annually to reflect any changes in your financial life and the markets .
2 . Take control of your retirement ! We cannot rely on the government or our employers as much as in the past . Save as much as possible in work retirement plans ( at least up to the match ). Employees under age 50 can contribute $ 20,500 in 2022 , and those over 50 can contribute $ 27,000 . Also consider funding Traditional or Roth IRAs for $ 6,000 under age 50 or $ 7,000 over age 50 . Beyond that , people can contribute to nonretirement accounts and / or annuities if it makes sense for their individual situations .
3 . Do not use your retirement savings to fund other purchases along the way ! It may be tempting to pull money from retirement accounts to buy a new boat or sports car , or to fund education for children , but that will make retirement more difficult . Try to earmark specific assets for each of your goals and leave retirement assets for retirement !
4 . Make your money work for you ! Money in the bank is finally paying a small rate of return , but over time , investing the money will generate much larger returns . Make sure you are maximizing your returns to meet your retirement goals in a timely fashion .
5 . Take care of your own retirement before helping others ! Some people are very giving and want to help out their children and grandchildren . This is wonderful , but it is important to make sure they have enough to live on during their own retirement . Otherwise , they could end up running out of retirement money and being forced to rely on others or Medicaid at some point . In closing , retirement looks very different today than 40 years ago . We need to take control of it and plan wisely to have a successful and enjoyable retirement . If we can help with any of this , please let us know !
1 . tatista . com / statistics / 1040079 / life-expectancy-united-states-all-time /
2 . cri . georgetown . edu / the-aging-of-america-a-changing-picture-of-work-and-retirement /
Securities offered through Triad Advisors , Member FINRA / SIPC . Advisory services offered through Triad Hybrid Solutions LLC , a registered investment advisor . Justabout Wealth Management LLC and Triad Advisors , LLC are not affiliated . Past performance is not indicative of future results .
David Hoffmann has 25 + years of experience as a Financial Advisor and is the CEO of Justabout Wealth Management . As a CFP ® designee , he counsels clients on financial planning and investments . He also serves companies by providing retirement plans .
For further information , contact David at : Justabout Wealth Management | 375 Southpointe Blvd . Suite 360 | Canonsburg , PA 15317 Office : 724.754.1440 | justaboutwealth . com
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