Monday, March 10, 2014

The only person you can count on for retirement is yourself

As we close in on the April 15 tax deadline, I want to remind my readers that it’s not too late to consider making a contribution into an Individual Retirement Account (IRA) for tax year 2013. Without going into great detail, IRAs come in three flavors. There are the traditional tax-deductible IRA, the Roth IRA and the non-deductible IRA, each with its own unique features and benefits.

Determining which one you’re eligible for and which suits you best can take some time. With the tax clock ticking, I suggest you move quickly to get everything completed by the tax deadline.

Now more than ever, it’s extremely important to save for your retirement. If you believe you’ll be fine in retirement because of your pension and Social Security benefits, you may want to reconsider. I’ve said many times that we’re in a YOYO (you’re on your own) world, and recent events make it very apparent.

For example, we hear about the Detroit pensioners on an almost daily basis. Former policemen, firefighters and other city employees are likely to see their pension checks reduced by as much as thirty percent.

Nobody knows what the final number will be, but it’s sad to see any retiree take a hit to his or her pension check. Over promises, fiscal mismanagement, criminal convictions and increased longevity have all contributed to the crisis.

That being said, the problem is not unique to Detroit. It may be one of the first cities to deal with the pension crisis, but I receive emails from an organization that tracks pension problems throughout the country virtually every day.

There’s a laundry list of cities that aren’t very far behind Detroit. It even appears likely that some states will be unable to meet their pension promises. Because of all the broken promises, real people are going to feel the pain of smaller pension checks.

In addition to the pension shortfalls that are sweeping the nation, the military recently announced cutbacks that will impact our military families’ budgets. Details will soon come out, but it looks like we will again be witness to another broken promise.

Pension cuts and military cutbacks aren’t all that concern me. If you’re still working, take a look at your report on the Social Security website. It clearly states that, on its current course, there will not be enough to pay promised benefits in their entirety.

Unfortunately, it appears that we’re entering an era of broken promises. My purpose is not to point fingers or lay blame. There’s plenty to go around. I only want to motivate readers to save for retirement. It’s really important because, at the end of the day, you shouldn’t rely on your employers’ promises to pay you after you retire.

Your retirement years shouldn’t be full of stress, especially if you thought you had everything in good order. Unfortunately, that’s no longer the case. I cannot fix the broken promises, but I can encourage everyone still working to save more on their own. If you depend on some other source to finance your retirement, it just may not be there when you need it.

I’ll say it again: You’re on your own. So please, take control now. You can’t afford to rely on others for your financial wellbeing.

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