Vail Daily column: The future with no pension plans
August 25, 2015
I am too young to know the "retirement" that used to be equated with a big party and a gold watch. Times have changed and the term "retirement" has been redefined. It'll never be the same.
More than likely, the last generation to enjoy pension plans, going away parties and gold watches were those of the Silent Generation; people born between the mid-1920s to the early 1940s. Why such benefits may have fallen by the way-side after this generation could be discussed in great length. However, I believe that it could also be simply synthesized.
Following the economic crisis of the Great Depression, the USA experienced an economic recovery which created jobs, new industries and new business investments.
While many people could argue that aggregate-demand stimulus, Keynesian economic principals or that Federal Reserve policies were contributing factors of recovery, others stand resolute that World War II and the government's demand for supplies to support the war played a great part in the U.S. recovery. Regardless of personal conviction, the bottom line was — people had jobs.
Businesses small and large needed employees, and employees that put in a hard day's work were appreciated and valued. The government also acknowledged and provided benefit programs to both veterans and the greater public. Benefits such as Social Security, the GI Bill and war bonds were developed to help those who had worked hard and contributed to the greater good of the country.
In return for committing 10, 20 and even 30 years of your most productive years, many companies showed appreciation and rewarded employee commitments with pensions, health insurance, going away parties and gold watches.
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For those of us who are not yet retired, we may have to look at retirement as being the next stage of our working career. It serves no good purpose to lament on what was. Preparing for retirement is now most often a task left to the employee. This means the employee is left to go out, research, plan and develop their own retirement. The problem here is most employees don't have the forethought to save, plan and supplement their retirement savings. Further, most people do not have the education and training to handle investments or develop a plan for lifetime retirement income.
Nowadays, people change jobs more than they used to so the traditional pension plan that rewarded tenured employees would serve little purpose. According to a 2014 report from the Bureau of Labor Statistics, "the median number of years that wage and salary workers had been with their current employer was 4.6 years."
As traditional pensions have become less common, retirement tools such as IRAs and 401(k)s have been developed. Unfortunately these retirement tools alone are only two of a number of tools available to develop a retirement plan. Further, for the employees of companies that offer these incentives, the employers are not mandated to keep abreast of changes in the financial market, plan option changes or inform the employees of hidden charges and fees for managing the investment.
The responsibility for handling your retirement income is matter you should not avoid. Nor should you feel that you don't make enough to develop a retirement plan. I felt this way for too long. Had it not been for my friend Chris Murray at Edward Jones, I would still think that the few hundred dollars I occasionally give him to invest would not make a difference in my retirement planning.
If a few hundred dollars is all you can afford to invest in your future, then that's a good start. Understanding stocks, mutual funds, 401(k)s, investment trusts and the plethora of other things that can help you prepare for retirement is complicated.
As you change jobs/careers, move to a different state or get to the point of your life where you think beyond today's needs, find a well-qualified financial planner to help ensure that your retirement planning is sound. There are a lot of corporate and individual financial planners and investment firm available in town that can help you develop a plan.
Creating a financial plan is important. If you have ever put spare change into a shoe box or water bottle, then you know all too well that it most likely did not get filled in a day, week or month. It takes time and discipline to save. Don't let pride and ego get in the way of starting your investment and/or retirement planning. The cost of not starting a plan sooner than later can end up being very costly and frustrating.
Judson Haims is the owner of Visiting Angels Home Care in Eagle County. For more information, go to http://www.visitingangels.com/comtns or call 970-328-5526.
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