Retired couple calculating their billsgetty Retirement planning is, for many people in the United States, the single biggest financial hurdle we face. According to the National Institute on Retirement Security, 67% of Americans say the United States faces a retirement crisis. Almost two-thirds of Generation X and Millennials worry about not being financially secure in retirement . Let’s explore some of the reasons why this concern could be growing, some history of retirement in the United States, and some considerations for people planning for retirement. Income For Life First, let us look at the past landscape of retirement for individuals, and how that’s changing. In the last 90 years in the United States, many relied on a pension for their retirement. A pension is an obligation by some entity to pay out an income to an individual for that individual’s entire life. Pensions are usually calculated based on income, number of years of work, and an actuarial calculation of how long the individual is expected to live, plus some assumed adjustment for cost of living. When I ask people about their parents’ retirement, many say something like, “My dad worked at the same company for 30 years and retired at 60 with a pension that he could live off of for the rest of his life.” Much of the onus historically not been on the individual to provide for their own financial security in retirement. One of the first pensions in the United States, Social Security, was invented essentially as insurance against living too long. Social Security benefits first came out in 1935 when the average life expectancy for a man was 59.9 and for a woman was 63.9 . You were basically expected to drop dead once you reached what we know as retirement age today. If you […]
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