As baby boomers begin to reach retirement age, their attention turns to their finances. Do they have enough saved? Have they taken the appropriate measures to ensure their IRAs are in good standing? Is there anything else they can do?
The recent financial crisis had a devastating, global impact, but it affected those closest to retirement the most. The values of IRAs and other retirement accounts could plunge. Savings could be lost. People were unsure of what to do and even more unprepared to deal with the consequences.
A new study suggests that those same problems have not gone away. According to a June 2013 report sponsored by the American Academy of Actuaries, many newly retired or soon-to-be-retired people have not taken sufficient steps to prepare themselves for their financial future.
Actuaries are certainly qualified to share their findings. As professionals who deal with risk, they're fully aware of the dangers facing people who may outlive the money they've set aside for retirement. If they believe that retirees are not properly prepared for the next chapter, it seems like a direct warning that everyone should heed.
Solving the problem
While the report is somewhat pessimistic, it offered potential solutions for impending retirees to better manage their funds.
One proposal suggested that employers could create programs to increase the value of lifetime income management. Educational classes and seminars would decrease the stigma that retirement planning is too difficult and time consuming.
Another solution suggests that individuals should discuss their finances with licensed professionals who can offer support and guidance. Enrolling in Time Deposit or Scout Funds IRAs could help mitigate the risk as well.
The report also called on federal policy changes that could address the fears over Social Security and modify the rules about how IRAs and other retirement accounts are managed. Requests for the U.S. Department of Labor to provide information for anyone who inquires suggest that a comprehensive, overarching approach would be most beneficial.
Even those just entering the workforce can take note. Establishing an IRA is a step toward ensuring that the money is there in 40 years so that retiring at 65 is a feasible option rather than an overly optimistic one.
Overall, the retirement crisis may just hurt the least informed. People who have consulted with professionals and invested the time and energy into managing their funds are prepared to reap the benefits when they retire.
Copyright 2016 UMB Financial Corporation
“UMB” – Reg. U.S. Pat.& Tm. Off.
When you click links marked with the “‡” symbol, you will leave UMB’s Web site and go to Web sites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other Web sites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.