The Fading Retirement Dream?

The AP released a story on December 29, 2013 by Paul Wiseman, David McHugh & Elaine Kurtenbach, business reporters for the AP, AP IMPACT: The World Braces for Retirement Crisis. I think this is a valuable article for us to help our students understand the issues facing those clients planning for retirement.

We’ve previously posted about individuals saving enough for retirement, and we know the impact that the “Great Recession” has had on retirement portfolios for many.   This article looks broadly at the “retirement crisis” which according to the authors, is due to the collision of 3 factors: (1) cutbacks in government retirement programs as well as changing retirement age, longevity and declining rates of birth; (2) the cut to private pensions, and (3) individuals failure to save sufficiently + the impact of the Great Recession on their savings. By examining these 3 factors together rather than individually, the article paints a different future for many who may never be able to afford to retire, a situation that is not limited to just the United States.

The article examines how an expectation of retirement came into being, contrasts those newly retired to those who may never be able to retire and devotes some attention to the issue of pensions. Companies as well have changed the benefits they provide to their employees. The article also points to the failure of  individuals to save (or save enough). Add to that the impact of the Great Recession, and we may find many who will never be able to afford to retire.

The article reviews the issues faced by some countries as well as their responses, and summarizes the changes the experts expect: cutbacks in pensions with the concomitant impact and the outlook for those who work past the traditional retirement age.

Want to retire?  Better start saving more now. Make it your 2014 New Year’s resolution–and make sure it’s one you don’t break.