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The New Retirement Reality: Are You Prepared?

Things are looking good. Really good. We’re riding high in the longest bull market in history, the Dow closed at a record 26,616 last January, and unemployment is down to 3.9% in August.1 What could be better?

Retirement planning, for starters. Despite the glowing financial vibes of the present, today’s workers may be woefully optimistic of their future.

The seventh annual Retirement Readiness Survey asked 16,000 workers and retirees across 15 countries which trends are impacting their plans for retirement. While 49% of workers believe future generations of retirees will be worse off than current workers, they still plan to depend on the traditional sources of retirement income.

In fact, U.S. workers surveyed expect 71% of their retirement income to come from the government and their employer. They may be in for a rude awakening.

Retirement systems around the world have generally operated on a three-pillar approach, often referred to as the “three-legged stool.” These include Social Security, workplace retirement benefits, and personal savings. Two of the three legs — Social Security and employer-sponsored retirement plans —have become incredibly strained.

A hole in the bucket

As life expectancy improves, a growing aging population is stretching the viability of Social Security. For a married couple reaching age 65, there’s a 50% chance one of the spouses will live to be at least 92, according to the Society of Actuaries.

Many of you may overlook, or completely ignore, the need to factor healthcare costs into your retirement funding. The average cost of a semi-private nursing home is $85,000 a year. The projected total lifetime healthcare costs for a healthy 65-year-old couple is over $404,000. When it comes to saving, your clients can’t afford to be passive.

Working for what

In addition to shrinking Social Security, employer-sponsored retirement plans are also being tested. The traditional one-job-for-life career model may be a thing of the past. It’s increasingly common for workers to change employers several times over their careers, even possibly becoming self-employed here and there.

Keep in mind — your typical defined benefit plan was designed decades ago to fund retirements of long-service workers with a shorter life expectancy. From a cost perspective, these plans may not be sustainable for today’s employers. Now we’re seeing employers shift to offering employee-funded defined contribution plans in which the employer may or may not make a contribution. In doing so, employers are not only expecting workers to self-fund a greater portion of their future retirement income, but also to bear more risk in managing the assets. Are you prepared?

A new blueprint

Understanding these variables is paramount to serving clients with true guidance. Yes, things are looking good. A positive market can feel reassuring, but as we learned in 2008, things can turn on a dime.

Our clients not only depend on guidance for today, but expertise that goes the extra mile.Financial411understands the true need of covering your bases.

To better understand how these new retirement variables will impact you, contact us today at 1-877-529-6543 or


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