If you could look into a crystal ball and predict which retirement income plan was more likely to be around in 20 years – would you choose Social Security or company pensions?
As much as the solvency of Social Security is constantly debated, it may well stay the course long term in some shape or form. Pensions, on the other hand, are rapidly heading towards extinction. The latest pension plans potentially facing cuts include Boeing and Major League Baseball (MLB).
Boeing recently announced its intention to stop offering pensions to new employees, joining the ranks of other large corporations that have adjusted pension offerings, including GE, Lockheed, Ford and General Motors.
It may be just as well, since pension plan funding has suffered significantly in recent years. In fact, Boeing has set aside only three-quarters of the $75 billion it owes for future pensions, a sum that represents more than the company’s current stock market value.
Boeing is not alone in its savings deficit. According to Olivia Mitchell, executive director of the Pension Research Council at Wharton Business School of the University of Pennsylvania, U.S. corporations currently boast the highest level of pension underfunding in history.
Even the MLB, despite climbing revenues of $8 billion a year, is considering cutbacks and/or alterations to pension plans offered by ball clubs. Similar moves by other organizations may not eliminate current pension plans, but they might stop contributing to them.
The lesson here is that we may be on our own going forward. Within a couple of decades, the majority of our retirement income may result from our own planning, saving, investing and purchasing insurance policies to protect our income in retirement.
If you’d like to discuss ways to generate and protect* retirement income in a world where individuals control their financial future, please give us a call.
By contacting us, you may be offered information regarding the purchase of insurance products.
*Guarantees offered by annuities are subject to the financial strength and claims paying ability of the issuing insurance company.
The information and opinions in the linked articles are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are for informational purposes only and should are not intended to provide specific advice nor provide the basis for any purchasing decisions.
Source: Woods Blog Old