Retirement is the dream of every working American. They long for the day that they can finally sleep in, watch TV and do whatever else they want all day long. It is a privilege denied to them since they were kids. This dream is shared by many, but will soon be realized by few. According to a recent article, there are 6 reasons why you will never retire.
1) Corporate pensions have cut down. In recent years, many companies switched to a defined contribution (i.e. a 401k), as opposed to a defined benefit. Defined contributions equate to a set amount that you set aside to go towards a pension fund at retirement. The more you decide to put in, the better the return at retirement. Remember though that this was set-up to save companies money, meaning that you would have had a larger fixed income if you were paying for a defined benefit. Defined benefits are paychecks sent to you every month for a set amount after retirement.
2) Smaller yearly incomes are hurting your chances of retirement as well. Annual household incomes have dropped steadily since 2000. Americans are earning on average 7% less than they were a decade ago.
3) As the number of families containing 2 working parents increases, the family has spent more money on child care than most families. Although it may not seem like a great amount on a monthly basis, the price of licensed center can range between $14,000 a year to $18,000. When you send multiple kids to childcare, the second parent’s paycheck is almost directly send to the children’s care. This leaves less money for your family and less to put in your bank account.
4) Investments aren’t paying out as well as they used to. Over the past decade, stocks have yielded a measly 1.8% increase. This means that if you invested $50,000 over the past ten years, you more than likely walked away with only $900 more than you started. Your investments are not paying out enough to rely on for a retirement.
5) Too many are saving too little in their savings. They are putting too much stock in a defined contribution pension to save them in their older age. They will not know they don’t have sufficient funds to survive until it’s too late.
6) Families used to subside on inheritances. Families would build up an inheritance for their kids—or for themselves—and then deliver the set amount of money to the right party at the right time. Whatever that amount was, it would be sufficient for their needs. Many modern families do not have an inheritance to receive—or at least one sufficient—that will pay for their livelihood from here to the end.
These are the 6 reasons why you may never retire.
That is, unless you take the necessary steps now to begin your own retirement savings. You can break the mold through your own efforts now. Use your money smart and find new ways to make money that are safe, legal and actually helpful.
Source: http://money.msn.com/retirement/6-reasons-youll-never-retire
