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Tough Times for Retirement: How to Make Yours Different

There’s no denying it or sugarcoating the facts. Government-run retirement systems worldwide are in a mess.

All in the Same Boat

The main problem is poor planning. Most pension plans, including Social Security, are similar in that the current working generation pays taxes to cover benefits for the retired generation. Very little, if any, funds are set aside to help pay these benefits.

Fewer workers now pay into these systems, which means less money for benefits. But benefits haven’t been cut—or weren’t cut enough. Greece’s pension plan, for example, still covers 96% of the average worker’s preretirement income, compared to the 40% Social Security provides. And we all know what great financial shape Greece is in!

In France, current budget shortfalls have forced the government to cover current retirees’ benefits with funds earmarked for future retirees. And Germany, Ireland, the United Kingdom, Spain and even Greece have all raised the age at which workers can begin receiving benefits.

To keep its system afloat, Russia is also considering raising its retirement age to 65. But with the average Russian male’s life expectancy at only 63, many Russians may not live long enough to receive their benefits.

Dark Times Are Ahead

Here at home, Social Security is expected to be broke by 2036. That means it will only be able to pay out in benefits what it takes in through taxes, forcing an immediate 25% cut in benefits.

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Today, 14 million seniors rely on Social Security to keep them out of poverty. Even with Social Security, 10% of seniors live below the poverty line. For future retirees in a similar situation, any changes to these benefits could be devastating.

Knowing all of this, why do we continue to rely on broken government systems to support us in retirement? The average yearly Social Security payout is $14,000. Is that your idea of a comfortable retirement?

The Solution is Up to You

If it isn’t, then you have to take action. Right now. Take responsibility for your own retirement, and you can have the kind of future we all envision—live with dignity, leave a legacy for your family, and remain independent of decisions made in Washington D.C.

According to HSBC’s 2011 global report on the future of retirement, folks who make a retirement savings plan (and follow through with it) have 245% more in retirement funds than “non-planners.” You read that right: 245% more!

When those “planners” built their plans with the advice of a professional investment advisor, their retirement assets were 357% more than those of “non-planners.”

Overwhelming numbers of current retirees say they would have saved more for retirement if they had it to do over again. Take their advice and find an investing professional you trust to help you start your retirement savings plan. One of Dave’s investing Endorsed Local Providers (ELPs) can answer your questions and help you choose investments that will change your future. Contact your ELP today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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