The changing face of retirement funds
Americans have faced many financial difficulties in recent years that will have an affect on them far into the future. One of the most apparent challenges they will face down the road due to the economic recession is the state of their retirement funds. Older generations had considerable success building a solid retirement fund, however, this is proving tricky for today's professionals. In fact, studies show that approximately 50 percent of working Americans don't have any retirement savings in the bank, according to an Economic Policy Institute report. While 401(k) plans are meant to supplement working class incomes, families that fall under this category aren't able to utilize them. While this may affect consumer spending now, it will have a much bigger effect on future spending and the financial responsibilities of younger generations.
The reason many aren't putting money into 401(k) plans stems from several different factors. For instance, low-wage workers oftentimes don't have access to retirement plans at their companies. High-wage workers have more liquidated assets and have more tax breaks. Plus, hidden fees are eating up a lot of professionals' incomes. In other words, those who would most benefit from retirement plans don't work at companies that offer them or aren't able to put enough of their incomes aside to develop a solid savings over the years.
MSN Money pointed out the stark contrast between the Boomer generation's savings and younger generations. Where older households were able to make a considerable sum of savings over the years, today's working class is struggling. Banks and credit unions can work with families to provide assistance with financial management to make this an option. But they can also encourage making every penny count by offering a self-service coin counting machine in the lobby of the institution. Every effort to develop a solid savings will help the economy and households down the line.
October 3, 2013