What You Can Do For Your Country

Posted On: December 12 2015

If your employees are like most Americans they don’t have enough money to retire. Not even close. Furthermore, many of the people that think they have enough will outlive what they have. Consider healthcare costs alone: Fidelity Investments estimates that the average 65-year old couple retiring this year will need $240,000 to cover future medical costs. This does not include the high cost of long-term care.

Did you know that 51%+ of the workforce has no private pension coverage? How many of them systematically set funds aside for their retirement? Will Social Security provide a sufficient safety net? Consider the following Social Security 2013 Beneficiary Data:

  • Among elderly Social Security beneficiaries, 22% of married couples and 74% of unmarried persons rely on Social Security for 90% or more of their income.
  • 34% of the workforce has no private pension coverage.
  • In 1940, the life expectance of a 65-year-old was almost 14 additional years; today it is about 20.
  • By 2033, the number of older Americans will increase from 46.6 million today to over 77 million.
  • In 2003 there were 3.3 workers for each Social Security beneficiary. There are currently 2.8 workers for each Social Security beneficiary. By 2033 there will be only 2.1 workers for each beneficiary.
  • The average monthly Social Security benefit for retired workers in 2013 ($1,294) amounted to $15,528 a year. The National Poverty Guideline for a family of 2 in 2015 was $15,930. How many retirees will end up living in poverty after a lifetime of hard work?

The figures above portend a national crisis on par with the Great Depression. It is like watching a train wreck in slow motion.

Your country doesn’t expect you to solve the problem. Your country needs you to do your part. The front lines in this war will not be the dry sand of Iraq or the cold mountains of Afghanistan. The front lines will be in Accounting or Human Resources. It isn’t your life but your pen that we need on the line. This will be a heavy lift for our country, but when you do your part, the lift will be that much lighter. Here’s what you can do:

  1. Amend your 401(k) plan to include automatic enrollment.
  2. Make sure participants have automatic increases in their % withholding.
  3. Reduce the cost of the Plan to the participants by ensuring the mutual funds in your plan have the lowest expense ratio available for that fund.
  4. Exchange formula-driven, inflation vulnerable Target Date Fund for Model Portfolios.
  5. Give your employees easy access to professional investment management by offering that option in the plan.

Your country needs you now more than ever. Small changes in your 401(k) plan today will make all the difference in the years ahead.

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