Retirement Savings Needs Are Rising

By Eugene A. Luciw, J.D.

The July 1, 2008 issue of USA Today had three distressing articles. They reported that “Stocks [were] off $2.1 trillion this year”, even as the “[g]oal for retirement saving rises”. “For many today, [the] golden years mean less travel, more work.”

For years, conventional wisdom projected that workers needed to replace 70% to 90% of their pre-retirement pay to maintain their customary standard of living in retirement. But now, as medical, energy and other costs soar, life spans lengthen and fewer retirees receive traditional pensions, financial planners say that we will need more.

Hewitt Associates, for example, projects that workers will need to replace, on average, 126% of their final pay in retirement. Many financial planners cited in USA Today agree with this assessment. Still others, Fidelity Investments and T. Rowe Price have increased projections to 85% and 75%, respectively. Another sobering fact is that “[a]n average 65 year old couple will need $225,000 just for medical costs not covered by Medicare.”

How do we address the problem? There can be but little doubt that we all must dramatically increase our retirement savings. We must not only use company pension plans such as 401(k) s, but must also invest in personal Traditional and Roth IRAs, such as the high interest bearing Providence Annuity IRA. Once we reach the maximum contribution limits on those plans, we must use annuities such as Providence’s to supplement retirement nest eggs.

By the same token, we must make sure that we are not over-invested in the stock market; that we properly allocate our assets and set our risk tolerances. Hurt by a record-setting run for crude oil and renewed concerns about the health of the banking sector, Wall Street ended a dismal second quarter on the cusp of the first bear market (a drop of 20% or more - in six years. “After a 10.2% drop last month, its biggest June loss since the Great Depression, the Dow Jones industrial average is now at 11,350, or 19.9% below its October all-time high”, USA Today reports.

Consequently, our readers must make sure that they invest an appropriate amount of money into so-called fixed income (interest-bearing) vehicles, such as Providence IRAs, Roth IRAs and annuities. Employees of charitable and government institutions as well as small business owners must also make use of the higher contribution limits offered by tax-sheltered annuities and SEP IRAs. All of these programs are available at Providence.

What are the consequences? A failure soberly to address retirement savings needs will result in seniors having either to downsize their retirement plans or to work through their retirement years. This is especially the case for those who would like to travel the world or to experience adventure.

How can Providence help? A Providence professional agent can help to satisfy your growing conservative investment needs with Providence pension and annuity products. He or she can also show you how life insurance is a vital element in your financial planning (See “America” Newspaper, July 3, 2008. p. ___). Providence can also refer you to those of its agents that are certified or even chartered financial planners.

TRUST IN PROVIDENCE: Call 1.877.857.22284 or email sales@provassn.com