The Disappearing Pension
By Ryan Payne, President
Let’s talk a little about an endangered species: the pension plan. Unless you’re part of the World War II generation, company-provided pensions are becoming a thing of the past. One great thing about the “Greatest Generation” was they could put their time in at a major corporation and not worry about investing or saving, because they knew at age 60 or 65 they’d get a retirement gold watch and pension to last a lifetime. But now there aren’t many pensions left, and many that still exist are underfunded, so there’s no guarantee you’ll have that life-long income.
Once a staple of the American workplace, pension plans have mostly faded away
Even the plans that still exist are frequently underfunded
A wise investment strategy can generate the same returns that pensions did in the past
With the exception of government workers, most of the Baby Boomers out there don’t have a pension at all. The advent of 401(k), 403(b), and other self-directed retirement plans has really put the investment onus on you, as well as the accompanying pressure. Furthermore, not only do you have the responsibility of investing money on your own, but you also have to consider longevity. The reality is there’s a good chance you’re going to live longer than your parents, which means you need to make your money last longer too.
So in addition to being an expert in your chosen profession, you’re now asked to be an investment guru and retirement planning specialist. Thus the accountability is on the individual to invest properly. But just because you don’t have a pension doesn’t mean you can’t generate the same returns as past pension plans did. A lot of people may not realize this, but pension funds grow by investing in the stock and bond markets like everybody else.
You just have to be very careful with how you invest and allocate your money to make sure it doesn’t run out in retirement. That means your focus should be on dollar-cost averaging into your investments so you can dollar-cost average out of them once you retire. The good news is you don’t have to try and figure out how to do it all on your own, because the expert team at Payne Capital Management is here to help guide you along the way.
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