The Dilemma

American workers today face a daunting challenge when it comes to assuring a financially secure retirement, much more difficult than prior generations.  The current retirement statistics paint a dismal picture; for most Americans Social Security is the single largest source of retirement income and 60% of widows live at or below the poverty level, $12,120 in 2018.  This reality is likely to become even worse for dual income couples when they retire. 


The reasons are not surprising: Nonpublic employee pensions have become rare and employer sponsored qualified savings plans have not fared well.  Social Security was intended as a safety net, never as the only source of retirement income.  Yet with all the financial advisors, company sponsored retirement savings plans and the deluge of financial planning information, Social Security remains the single largest source of income for most Americans. (see the attached 2018 Social Security Fact Sheet)


The first basic tenet of financial planning is having an emergency fund to cover at least 6 months income, with some advisors now recommending extending that to one year after the 2008 meltdown.  However, in the recent Federal government shutdown it was reported that Federal employees were facing financial hardships without a paycheck after just two weeks.  These employees generally have incomes above the national average and excellent benefits including a pension.  Either this reporting is incorrect, or we must assume regular Americans are not much better off and the vast majority will not have a pension to provide monthly income in retirement.


The key to a financially sound retirement is “guaranteed” income, income that cannot be outlived, no matter how long you live.  Guaranteed income includes pensions, income annuities and Social Security.  Other investments simply cannot offer the same level of security.  That doesn’t mean one should not own rental properties or continue to maintain a stock portfolio.  These assets are best suited for providing income above and beyond what is needed for basic monthly living expenses.  Studies indicate that investors having enough guaranteed income generally have portfolios that perform better than average investors during market corrections or downturns.  For the property investor this strategy also assures adequate income allowing time needed for rehabbing a rental or when seeking a new tenant.


It is not enough to just think that somehow your situation will work out.  With proper planning one can increase pension and Social Security income.  Retirement income can also be increased by simply knowing which money to take first and when.  There is even a way to defer a portion of money accumulated in tax deferred accounts beyond age 70 ½.


The information in this website is intended to provide overviews on a variety of subjects.  it is in no way intended to replace the need to communicate with the proper professionals for assistance in personal situations. 

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