After representing Kansas’ 99th District in the state’s House of Representatives for a term starting in 2009, Aaron Jack went on to cofound Genius Diversified Holdings, LLC. Now serving his firm as president in its Overland Park, Kansas, headquarters, Aaron Jack concentrates on setting the firm’s strategies to help clients grow and safeguard their resources and prepare for their retirements.
Planning for retirement is a critical element of individual and family financial planning. Through the 1970s and early 1980s, most people could look forward to a retirement funded by an employer-sponsored pension plan and supplemented by Social Security. Both of these programs paid guaranteed retirement incomes based on a combination of years of service and annual earnings.
While Social Security remains in place, the pension plans have more or less been supplanted by self-directed programs like Individual Retirement Accounts, 401(k) plans, and similar options, which are funded by workers themselves and sometimes subsidized by their employers. These programs carry no guarantees. Thus, today’s workers shoulder more of the responsibility of managing their retirement savings.
Many workers today, though, don’t have any retirement savings beyond Social Security. According to a recent survey conducted by the Federal Reserve, nearly a third of all working people have no pension or retirement savings plan. Included in that figure are nearly a quarter of all workers older than 45. Thus, unless their circumstances change dramatically, those people will retire in 20 or fewer years’ time on their Social Security income alone, which currently averages about $1,300 per month. While that figure will likely rise as time passes, living costs will rise with it.
While it can be a challenge, working Americans without retirement savings, regardless of their age, should review their finances and try to save a set amount every pay period, no matter how small, for retirement. Compound interest can make this money grow dramatically over the course of a decade or two, or more, and can help provide a cushion in one’s golden years.