In the April 11, 2016 issue of Time Magazine I got interested in the article "Everbody needs a pension. Here's how to build your own."
What interested me was that in 1979 38% of workers had pension plans, which has dwindled to 14%. After 3 decades the statistics have changed by 24%.
Up in coming is the largest wave of pensionless workers retiring. Since 1980 traditional pensions have been swapped for 401(k) plans. Curious about the difference?
Pensions have the investment plans controlled by the company, and the employees have no control
over investment decisions. The employees are promised a certain amount of income after retiring which is dependent on the number of years of service and the amount of the contribution. Pension plans present less risk than 401(k)'s.
401(k) plans do not work the same way. 401(k)'s are tax advantaged savings. There is more risk but the employee has more control. There is no guarentee of a fixed retirement income. The retirement income stream will vary, with a fixed income though Social Security benefits.
When in doubt they suggest setting up an income plan through a financial planner or advisor.
Four Suggestions
1. Social Security is the fixed retirement income. To maximize the benefit delay filing until 70.
2. Plan to invest in Fixed Annuities will close the gap between your income and fixed costs.
They suggest 25% of savings invested in a fixed annunity.
3. Put 3 years of spending into a Bucket Plan. Save it in a money market account.
4. If you own a home, look into a reverse mortgage line of credit.
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