Post Recession Retirement Planning: It’s About Choices

By Tina Marie

What a shock it was for millions of investors to see the losses to their retirement savings accounts that were sustained from the recession and the stock market crash of the past 18 months! It left many people with a series of difficult choices about how to save for their future. Even now during a supposed “economic recovery”, retirement funds are barely recovering while the stock market has made its recovery climb of recent months. The investors who have lost most of their investments will most likely not be able to regain their losses, and this means that they will need to find a way to re-establish their finances or to change their ideas of the standard of living they had planned for their retirement years.

Traditionally, planning for retirement has been a part of the saving process for most working people. Many companies as recent as the 1980’s have offered retirement savings entitlement accounts called pensions as an employee benefit. These pension plans provided a guaranteed monthly sum granted at retirement and does not require any employee contribution. More recently, due to the costs involved in offering these pension plans along with the downturn in the economy, employers generally offer a self-investment retirement account called a 401 (K) retirement plan. The 401 (K) retirement plan is a tax deferred retirement savings plan where contributions are made by employees and the company usually but not always matches a percentage of the employee’s contribution. These contributions are invested into money market accounts, stocks or bonds. Employees have the freedom and control to change these investments how they wish. The outcome at retirement time with the 401 (K) retirement plan is dependent on how much money was made off of the investments.

Many boomers and retirement age people who are approaching what they thought was their retirement age, now see that golden age of retirement being pushed further into the future. The drastic losses that many have taken to their retirement savings investments leave people with the question of how to regain and restore their retirement nest egg in these tough economic times.

There are many ways to plan for retirement and to safeguard your retirement investments; it is just more difficult than it has been in recent decades. One option to increase retirement income is to postpone retirement and to delay receiving social security benefits. The average social security income for a retired couple is approximately $1,875.00 per month. This is a very small amount for those who have a higher established standard of living. The remainder of the retiree’s monthly income is supplemented by retirement savings. It is estimated that monthly benefits increase by about 8% each year of work. Delaying retirement could increase benefits and allow for more contributions into your retirement investment plan. It is crucial to the earnings of a retirement plan to regularly research and adjust your investments accordingly to the changes in the market.

There are risks associated with deciding how to save for retirement and these risks have increased because the playing field has changed dramatically in terms of retirement savings. Investing in a time of financial instability is always a risk, especially for those very close to retirement age. Those in their 30’s have years of a fluctuating market in which to try to regain their loss investments. Younger people who are years from retirement can also invest with a higher level of risk than those investors that are nearing retirement age who have a goal to secure investments and maximize their income for their retirement years.

Retirement planning has become a choice making job for boomers, seniors as well as younger investors. Deciding how one wants to live after retirement can be a determining factor to deciding on what age to retire. Some retirees dream of travelling, some dream of purchasing that summer home on the lake. The reality is that because of the increased risks associated with the investments in retirement savings and the financial instability of the economy, many young workers, boomers, and seniors will be forced to change their retirement plans.

It is important for people to get informed about retirement savings planning by researching all options available. There are many resources available for people to become informed as well as resources for companies that assist individuals and advise them with wise, sound choices for their retirement savings plan needs. Get informed and plan for your retirement today!

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