One of the big goals most investors have for their portfolios is to fund their retirements. It's sad to say, but building a nest egg that's large enough to keep us secure in our old age is going to be a much heavier lift for today's workers than it was for our parents of grandparents.
Alison Southwick and Robert Brokamp discuss one of five major ways that retirement planning has changed, and what you can do to adjust to the new realities. In this clip, they explain the unfortunate ways in which two pillars of support for previous generations of retirees won't be as readily available by the time you're ready to stop working.
A transcript follows the video.
This podcast was recorded on June 21, 2016
Robert Brokamp: No. 2 -- and this is something we all know -- is that we're going to have to expect less help from our boss and Uncle Sam. Social Security, we know, has issues. In terms of when the issues will likely hit people -- at least according to the recent Trustee's Report -- taxes cover most of the benefits. We have to tap the trust funds a little bit, but those are going to be out in 2029. At that point, people have to expect around 70% of what they're currently promised.
I don't think it will get to that point. They're going to make a change before then, but what you have to expect is that either, (a) if you're working, you're probably going to have to pay more taxes, and (b) certain people will have reduced benefits either because it's means tested, or you just have to wait longer to get them.
When it comes from your boss, we all know that decades ago, people could generally expect some sort of help, whether it was that traditionally defined benefit pension. Even [up until] 1988 -- I found this amazing -- two-thirds of big employers provided healthcare for their retirees.
Alison Southwick: Oh, wow!
Robert: Isn't that amazing?
Alison: That's amazing.
Robert: And now it's about one-quarter, and most of those folks are government folks. So compared to what our parents experienced, and even what current retirees have, you're just not going to get as much help from employers or Uncle Sam, which means the onus of it is really going to be on you to do your retirement planning.
Alison: That's another piece of bummer news.
Robert: That is another bummer.