Working Longer May Not Be the Answer
The retirement savings dilemma seems to be one of the most enduring topics covered in media outlets these days. From those approaching retirement with meager accumulated wealth to those forced out of careers just as they entered the “wealth accumulation” years they expected to have, the statistics are dire. And it’s not just maintaining a desired life style that’s in question…in many situations it is becoming a matter of survival for the long haul.
One of the frequent strategies those with insufficient savings turn to is to just work a bit longer than planned, and delay the need to draw on Social Security and accumulated resources as long as possible. But that option is evidently disappearing, as suggested by Forbes contributor Teresa Ghilarducci in a post today on forbes,com. Being forced out of a position as they age, suffering the consequences of a company failure or management change, deteriorating health, or family care-giving responsibilities are cited as likely causes of not being able to remain in the workforce. Similarly, leaving a career job and returning to the workforce later presents other challenges, like lower compensation and longer periods of unemployment, making this approach to solving the savings dilemma also more and more unattainable.
Ms. Ghilarducci advocates a Guaranteed Retirement Accounts (GRA) approach in her article, describing GRAs as “secure retirement accounts funded by employer and employee contributions throughout a worker’s career paired with a refundable tax credit.” With an intent to “allow all Americans access to dignified retirements after a lifetime of work,” this concept is explained as “a solution to the retirement savings crisis,” and is similar in scope to an approach developed by the Association of Mature American Citizens (AMAC) in its Combined Social Security Guarantee and Social Security Plus Initiative. The AMAC approach calls for a supplemental voluntary companion benefit retirement account to provide access to additional funds for all workers at age 62 and, like the GRA concept, would help ensure that funds would be available to supplement the cost of retirement.
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