• 1
• 2
• 3
• 4
• 5
• 6
• 7
• 8
• 9
• 10

It’s 10 p.m.—do you know where your pension benefits are?

The highly-regarded Conference Board (CB) sees 77 million baby boomers headed for retirement with “nearly every facet of corporate pension plans subject to analysis and change.”

This isn’t heart-warming, especially for disabled employees relying on such plans.

CB argues the decline in defined benefit plans and rise in defined contribution plans, plus increasing longevity, augurs “growing risk among employees regarding retirement benefits.” It’s “unclear whether employer programs can support long-term financial security.” 

“Legislation, including the Pension Protection Act of 2006, liberalized requirements for defined contribution plans,” CB claims. Still, many experts disagree over whether the new rules for defined benefit plans “will help stabilize the system or encourage more companies to curtail their plans."

Outlive Income?
The Pension Protection Act of 2006 was intended to improve the “pension system and expand opportunities to build retirement nest-eggs.”

The risk is two-fold, CB claims. “No. 1: employees will outlive their retirement income and experience a significant decline in standard of living; No. 2: employees are investing more than they should in equities, due partly to limited options for their defined contributions, inflation, and market volatility.”

The quandary/quagmire isn’t limited to the U.S.

On May 31, 2008, The Star in Toronto quoted Keith Ambachtsheer: “Millions of middle-income Canadians need a new pension plan, or their living standard will fall.” Ambachtsheer is an investment advisor and adjunct professor of finance at the University of Toronto’s Rotman International Centre for Pension Management.

Little Sense
Meanwhile, the Journal of Accountancy noted how “capital markets are much more volatile than they’ve been in years (and) caused some pension plan fiduciaries to rethink their role, including investment strategies.”

On May 21, 2008, The New York Times reported: “By firing its actuarial consultant, the State Legislature shone a light on one of the public sector’s deepest secrets. All across the country, states and local governments are promising benefits to public workers (based on) numbers that make little economic sense.”

Perhaps David Petso sees the future. As a Certified Financial Planner and president/owner of Petso Financial Consultants LLC, in Boise, Idaho, and 25 years-plus in financial planning, he contends Americans must “redefine retirement (because) the system isn’t built for so many retirees. Social Security was (begun) when the average life expectancy was 48; it isn’t equipped to handle this many retirees.”

Destined to Implode
Petso thinks “most should work longer, maybe part-time in a field they enjoy. With increasing age and diminishing numbers of children to replace (funds), our system is destined to implode. Everyone must become more involved in their own savings, investing, and be responsible about their retirement plan.

As for equities, Petso believes retirees “have too little. Fixed investments won’t keep pace with inflation; with long lives people will simply run out.” He sees retirement “vastly different. We as a society can’t afford to support people for 20 years as kids and 40 in retirement. Those that want an adequate retirement need to plan and save for it.”

In his wheelchair in Jacksonville, FL, Herb Drill heads Able Me & Associates. His e-mail address is herbdrill@ableme.com. He has Muscular Dystrophy.