3 Retirement Tips To Consider In 'The Era Of Personal Responsibility'
“No longer can the government and agencies be relied upon to financially support us in retirement as they have done for previous generations,” founder and chief executive Nigel Green of deVere Group has warned in a release circulated today, December 11.
Occurring at the cusp of a vote in Congress that could slash current retiree benefits, Green's comments have the desired effect of dragging the retirement conversation out of the shadows once more.
Bill Could Affect Current Plan Holders
The bipartisan bill would allow multi-employer pension plan providers to decrease the benefits they deliver to those currently under their plans. Proposed as a step to help the government avoid bankruptcies, Green commented, "The vote in Congress underscores what has been increasingly obvious for several years now – that planning for your retirement is now almost entirely down to you."
Possibly affecting 1.5 million people or more, Green continued with a resounding cry for renewed personal responsibility. "We are now in an era of personal responsibility," Green said, "Unsurprisingly, the concept of saving needs to be reignited and prioritized."
"The vote in Congress should serve as the ultimate wake up call for both the working population and current retirees. It should hit home that a failure to make your own provision for retirement, or possibly adapt your retirement planning strategy, could put you at risk of a potentially insecure future."
Embracing Personal Responsibility
Regardless of the vote's outcome, it is prudent to take a fervid interest in your retirement and the retirement of your loved ones. Below are three essential steps that can help lessen the stress that inevitably occurs with retirement planning.
1. Discuss Government Programs
Take it upon yourself as a loved one to understand how Social Security and Medicare work.
Be aware of changes in Social Security. "Social Security is at its roots an 'inter-generational transfer of wealth,'" a recent NASDAQ article explained. "Paying Social Security is mandatory; receiving benefits is voluntary."
Be aware of changes in Medicare. Understand that plans change frequently and do not typically include "grandfathered in" clauses to maintain the same coverage from initial enrollment to death.
Director of the Kaiser Family Foundation's Program on Medicare, Tricia Neuman, commented that many seniors do not keep up with the changes that will occur each year, an oversight that has the potential to negatively influence their financial situation.
"People tend to pick a plan and stick with it," Neuman said. "Now is the time for them to take stock of what providers are covered by their plan and make a decision if they want to stay."
2. Transparently Discuss Other Options
Discuss with your loved one the steps they have made to secure their future outside of government assistance.
Talk about retirement plans, pension plans, 401(k)s, savings funds and the breadth of retirement portfolio options.
Reiterate the benefits of asset allocation and diversity.
3. Have The Difficult Conversations
Discuss end of life care, life insurance, funeral arrangements and preferences, wills and estates.
In the end, the outcome of the vote -- while influential -- does not necessitate an overthrow of your retirement plans. If you have already taken appropriate steps to prepare for the unknown future, you can take changes in stride. Be aware that nothing is certain and take measures to protect yourself and your loved ones.
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