There was a time in American when it was not usually to work your entire life for one company and then retire with the security of knowing that every month a company retirement check would show up in your mailbox. As I am sure you realize those days are long gone. Outsourcing, mergers and overseas competition have changed the landscape of the America workforce. I work in IT and recent studies have shown that on average folks change companies every five years in IT.
Gone too are the days were a company would provide a pension plan to its employees. With a company pension plan every employee knew exactly how much money they would have when they retired. The companies funded the pension plan and the employee was not responsible for making any investment choices. The company took care of it all. When you retired you would get a retirement check for the REST OF YOUR LIFE.
Can you image the dismay felt by thousands United Airline workers when their company declared bankruptcy and was allowed by the courts to default on billions of dollars of employee retirement money? This is just one of several recent examples where company funded pensions have failed. The mantra of this posting is “you are responsible for your retirement”.
Most companies have shifted from company funded pension plans to 401(k) retirement plans. With these plans employees put a portion of their earning into tax-deferred investments. Sometimes a company will match a portion of the dollars the employee contributes. The two big differences between a traditional company funded pension plan and a 401(k) are:
- You are not guaranteed a retirement check for the rest of your life.
- The company provides a selection of investment choices and it is up to the employee to research and understand the investment choices.
You are responsible for your retirement, not the company. You, not the company, need to make sure you are not living in a run down apartment and eating canned food when you are 70 years old.
You need to save and invest for your retirement NOW. Time is your enemy. Now is the time to start taking responsible and learning about your 401(k) investment choices. Now is the time to start putting money aside each month to make investments. You need to make your money work for you now or you have no chance of enjoying the 20 or more years you expect to live when you retire.
As the first step I urge, beg and implore you to watch the PBS Frontline documentary entitled Can you afford to retire?. You can veiw the show for free online. The instructions state that you need Microsoft media player or Real Player. I cound not play the show using Media Play, but was able to using Real Player. If you do not have the time or bandwidth to watch the show online you can visit your local library and see if they have a copy.
The picture in this posting is meant to be distrubing I want you to seriously think about where you will be 10 years after you retire. Example: my rent is $1,000/month and my food bill is about $500/month. So food and housing is $1,500/month for me.
I want to live and have fun for at least ten years after I retire. How much do I need? $1,500 X 12 = $18,000 per year
10 years = $180,000
Now this is very basic and actually $180,000 won't even come close to being enough money to live on for ten years. The key is learn about investing and start making your money grow now. This is the only way to increase your chance of having the retirement you have dreamed of. Now go watch the video. Check back in at Pennyjar and let's learn together how to invest wisely.
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