Magazine article American Banker

Educate Customers to Plan Early for Retirement

Magazine article American Banker

Educate Customers to Plan Early for Retirement

Article excerpt

The following is excerpted from a speech delivered by J. Carter Besse Jr., a member of the Securities and Exchange Commission, at the Bank Securities Association's annual convention earlier this month in San Diego

Over the past 18 months, I have spebnt a great deal of time studying what I believe may be the next major financial disaster to strike our nation. Specifically, I'm speaking of the failure of many American workers to adequately plan and fund their retiremet. Recent studies have shown that three-fourths of all Americans over 20 will have less than half of the retirement funds they will need. When it comes to preparing for retirement, most Americans are not participating early enough, saving enough. Many Americans appear to laboring under a popular misconception: that planning for retirement is something you do after age 40, if at all. But for most workers, nothing could be further from the truth, or more dangerous.

The world has turned upside down for the next generation of retirees. Almost gone are the days when the golden years began with a gold watch, a pension including built-in inflation adjustments, and generous health care benefits paid by former employers or the government.

Today, over 40 million workers are covered in part or entirely by a defined-contribution pension plan, usually a profit-sharing or 401(k) plan, where they are responsible for saving and investing to fund their own retirement.

As companies move to defined-contribution pension plans, millions of individuals are now responsible for the investment decisions that will determine how well, or how poorly, they will live when they retire. …

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