My Comments: Too many people are wondering where the money will come from to pay for their retirement. And too many people will not have enough money to live the way they want to. And too many people will not have the necessary resources to pay for health care in retirement.
All this is leading to a crisis in this country as the baby boomers continue to retire and live longer and longer. The pressure on the economy and on the mental health of struggling people will be immense.
At the risk of being called on the carpet for brazen self-promotion, click on the image on the right showing a train headed toward the mountains. It’s a link to my online course on retirement planning. There are a bunch of free videos for you to share with anyone trying to figure out what to do before they retire.
by Peter Reagan \ November 9, 2018
It’s become fairly common knowledge that public pensions are on the verge of either radical overhaul or extinction.
Add it all up, and the situation doesn’t look good for public pension plan payees. Many police, fire, public education, and municipal personnel are (or will be) directly affected.
But even if you’re not drawing a public pension — the majority of us do not — don’t think you’re safe. You might think failure of a state public pension wouldn’t affect you. It’s a reasonable thought, and partly correct. That’s because it likely wouldn’t affect you directly.
But the indirect effects may prove to be a burden for anyone in or entering retirement. There are two primary reasons for this.
First, according to a recent Washington Examiner op-ed, almost half of Americans have no retirement savings to deal with these indirect effects (emphasis ours):
Despite the existence of IRAs and 401(k) plans to encourage retirement savings, almost half of Americans have no net assets at all, and little or no retirement savings. Many of them have no money to save and no retirement account to put it in.
And second are “hidden” consequences of failing pension programs at the state level, which may affect every person who pays taxes.
The Potential Ripple Effects of Failing Public Pensions
Martin Smith is a correspondent for PBS who has reported on America’s growing retirement crisis. Speaking to Richard Eisenberg, he revealed the imminent potential for cutting services or a federal bailout if state pensions fail:
“About half the states have pensions that are 70% funded or much worse. The states can’t borrow or sell bonds to China.” So, Smith adds, in four or five years, some of those states will likely have to either cut their services (the equivalent of a state bailout) or they will need a federal bailout.
Imagine if the police force or firefighters in your city suffered dramatic cutbacks to account for pension shortfalls? Or, if your taxes went up to account for a federal bailout of state pension programs?
Neither ripple effect is desirable for any person. But both could happen if pension shortfalls become too much of a burden at the state level.
According to a PlanSponsor article, “employer-sponsored retirement plans” and IRAs look to be alternative options, among other savings ideas. But some still feel stuck in their current situation.
Eisenberg’s report, republished at MarketWatch, ends on a somber note from a teacher: “I have no savings. My pension is everything. Without that, I won’t survive.”
That’s a stark reminder to make sure we don’t put all of our nest-egg in one basket.
Start Building a Resilient Retirement Now
It’s important for you to start making your retirement as resilient as possible. This will give you the best chance to enjoy your “Golden Years.”
Over at The Hill, Olivia Mitchell offers some suggestions that may help. She recommends that you “understand that your pension and Social Security are not fully guaranteed.” Benefit cuts are always possible.
She continues by suggesting you “delay retirement as late as possible” because benefits can pay out higher at later retirement age. This also reduces the time you receive payouts, so your fund can last into your later years.
Finally after suggesting part-time work to supplement income (if possible, and if necessary), she suggests cutting spending now as much as possible.
If you don’t have any retirement savings yet, the best time to start is now. As time goes on, you can consider adding some stability to your portfolio by shifting a percentage of assets into precious metals like gold and silver.
Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.