The quality of one’s future after retirement primarily depends on the amount of savings or wealth they accumulated during their early working days. Therefore, because of the unpredictability of the economy, proper planning for retirement is one of the primary things that every American citizen should endeavor to do, because failure to do this can be very detrimental to one’s quality of life after retirement.
As compared to the past when it was simple to approximate the amount of funds that were necessary to sustain individuals throughout their old age, currently, the instability of the economy has made this task almost impossible, as result of the ever-changing cost of living. Over the recent past, prices of essential commodities, transportation, health and primary care has risen drastically, and because likelihoods of this trend persisting to the future is high, it becomes important for individuals to adopt better saving options for their retirement. Although there are many schemes of saving for retirement, most Americans have put their entire hopes on social security as their primary way of saving, with little consideration of its shortcomings. The stability of social security scheme has been one of the most debated issues by the elite class, because of its deficits in meeting all its clients’ retirement needs.
For example, as research studies show, social security only caters for approximately 60% of an elderly person’ needs; hence, heavy reliance on this program can greatly jeopardize one’s quality life after retirement, if they solely depend on only this program’s funds (Pond, 2010, p.1). Considering this, it is important for workers to reformulate their retirement saving plans, by starting to save early and adopting new and better saving plans, which will give them an opportunity of accumulating real wealth that is enough to cater for their retirement needs.
In formulating retirement plans, most individuals primarily target particular retirement ages, with little consideration of the fact that, likelihoods of uncertainties occurring, which may force them to retire early are high. In addition, with the current economic situation, regardless of the reliability of the method used to approximate the amount of savings that individual will need for their life after retirement, most of these methods never account for the numerous economic changes that may alter the an individuals spending habits, amount of expenses, and general lifestyle. In any economic situation, because inflation is inevitable, failing to cater for economic uncertainties that are likely to occur in the future, hence save enough funds to cater for them, can greatly jeopardize a retiree’s life. This makes it necessary, for individuals to start saving immediately after they start working, it being one of the primary methods of ensuring they would have saved enough for retirement, incase they are weak or not able to work during their late adulthood ages. By 2003, as indicated by research studies, approximately two out of five retirees accepted to have retired early than they had anticipated, because of health complications, effects of economic crisis that faced their organizations, work problems, and change in career plans. As the result of these reasons, the credibility of social security scheme is questionable, because the amount of accumulated funds from the program depends on how long an individual works, making it hard to rely on it sorely (Sondergeld, Greenwald & Rowland, 2005, pp. 6-15). Social security is a state managed program; hence, although it can be a promising method of saving, like any other governmental program it can go into bankruptcy.
If this like an occurrence occurs, most retirees who saved sorely through the scheme or who sorely depend on the scheme are likely to suffer in poverty or struggle their entire life searching for ways of sustaining themselves. Another thing that makes the social security program to be an unreliable anti-poverty and retirement scheme is the nature extreme of influences of politics on its running. Majority of the policies that run the American social security program are politically driven; hence, largely, this program rarely takes into consideration the amount of struggle the ordinary citizen has to go through in the endeavor to save for retirement. This makes it necessary fro individuals to embark on the process of saving for their future immediately they join the workforce by adopting good saving schemes that are reliable and accommodate the type of lifestyle every American, regardless of their socioeconomic status. A good saving plan should not limit or penalize any member of the society, but rather it should offer them good returns for any amount of funds saved; funds that can enable individuals to sustain themselves and their family needs throughout their lives (Benson, Blendon, Brodie, & Wainess, 1998, pp.
3-9). As research studies show, although majority of the elderly Americans get more than fifty percent of their funds from their social security funds, as compared to private and capital investments, earnings from this program are far much below amount that individual should get from their savings. Further, unlike other saving schemes that leave an individual with the freedom of deciding how much to invest for their future, social security being government-controlled program gives the government the power of deciding the amount of tax citizens should pay, with little consideration of their socioeconomic status.
Considering this, it is important for individuals to analyze critically their future retirement needs, adopt good saving plans immediately the start working, because of the numerous uncertainties in one’s life (Tanner, 2000, pp. 1-6). In addition to the numerous flaws of the social security program and uncertainties that may occur in one’s life, the ever-improving quality of life sustaining opportunities have put many individuals to the longevity risk.
Due to this risk, most traditional retirement saving methodologies do not offer the required confidence of a bright future after retirement. As research studies show, although still some employers have maintained the traditional methods of saving for retirement and giving of retirement funds, new methodologies have come into practice, for example, the cash balance from of plans. Yes, although these forms offer employers an opportunity of getting their savings in lump some amounts, economically, this a risky method, as it places the entire role of saving and managing retirement benefits to workers. It is important for individuals to note here that, although individuals may have enough to save for retirement, majority of individuals underestimate their life expectancy; hence, unless one adopts a good saving plan during their working times, likelihoods of only social security funds supporting their retirement needs are low.
This is the case primarily because; the more an individual lives the more their health, basic, and other life sustaining needs increase. At this point, some individual may argue that, Medicare or Long-term Care Insurance (LTCI) can cater for their retirement needs. Although this might be the case, most individual never consider the costliness of these programs, because after retiring there is no employer-based support that can cater for any deficits. Therefore, to avoid any resource deficits, it is important fro individual to save in plans that can guarantee them that; they will receive continuous income, necessary to cater for the numerous old age needs, when many sources of income hardly exist (Actuarial Foundation, 2010, pp. 47-50).
In conclusion, considering the numerous hitches that the social security program faces in providing individuals with all their old age needs, and the fact that, majority of elderly individuals hardly have any other source of income apart from their savings, it is important for individual to save in real investments. Such should be the case right from the time one joins the job field, because many economic, health, and social uncertainties can make individuals loose of or drop out of their jobs; hence, putting their future at stake.
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