The Millennial generation is set to overtake the Boomer generation as the majority population of the United States. Born between the late 1980s and early 2000s this group of people will have a very different retirement than their elder generations. The Social Security and pension plans previously counted on by their parents and grandparents will be all but extinct when these late boomers enter retirement.
The concept of Lifetime Income and its growing popularity in company sponsored retirement plans is the result of employees rather than employers being increasingly responsible for assuring the adequacy of their retirement savings. In addition, because defined contribution plans (401k, 403b) typically distribute retirement savings in a lump sum payment, employees are also responsible for ensuring that their savings last throughout their retirement. Managing finances in order to provide income for life for oneself and one’s spouse is a tremendously difficult but important task.
Individuals may not understand what savings, asset allocation and drawdown decisions are necessary to achieve both of these goals. In particular, participants in defined contribution plans may have difficulty envisioning the lifetime monthly income that can be generated from an account balance. The Department of Labor and Leading Retirement Solutions are seeking ways to facilitate access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement.
The U.S. Department of Labor Employee Benefits Security Administration released a fact sheet introducing a proposed shift from classic social security benefits towards Lifetime Income. Below is an excerpt.
“Workers today face greater responsibility for managing their assets for retirement, both while employed and during their retirement years. This greater responsibility is primarily a result of the trend away from defined benefit plans, where a worker’s retirement benefit is typically a specified monthly payment for life, and toward defined contribution plans, where typically contribution, asset allocation and drawdown decisions are made by the participant.”
Self-management of finances for the life of oneself and a partner is a daunting but very important responsibility. As individuals, it isn’t expected that we understand what asset allocation, savings, and drawdown decisions are necessary to achieve financial goals. Overall, creating predictions for our required monthly income necessary down the road can be difficult. Seeking help from a third party consultant or advisor is a powerful solution to managing the future, companies like Leading Retirement Solutions are excellent resources.
What does this all mean?
This new reality means that individuals and households are now more in charge of their retirement planning than ever before. Managing dollars and accounts is increasingly more important as their lives unfold. Seeking avenues and support for the strategic allocation of today’s funds for tomorrow is imperative for success in your retirement years.
The changes for the millennial generation are complex. The role of private retirement plan & savings services, such as Leading Retirement Solutions, have become increasingly more vital to employers and employees. Agile and personally attentive groups such as Leading Retirement Solutions support and manage assets for employers and employees to the specific needs of those being served in regards to planning their retirement.
What has changed?
The achievements of medical the industry have bettered the health and prospects of humans, the result is a greater life expectancy. Increased life expectancy means that there will be more citizens in the world. These people will need to be taken care of as they live into their retirement. If you’re reading this, more than likely you’re one of those people.
Supporting clientele in navigating through their transition in the new retirement landscape Leading Retirement Solutions is set with flexible and custom retirement 401(k) plans. Keep watch of our blog for more information on 401(k)s, retirement plan savings, and general savings ideas!