Ep 8: Why Pensions Are Becoming a Thing of the Past

Pensions are not as popular as they once were. Why are they becoming extinct, and how are people now saving for retirement?
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Show Notes For This Episode

On this episode of Saving the American Dream, we’re talking about pensions. Our parents and grandparents relied on these quite a bit, but they’re not as popular these days with companies. 

“The status of the American pension plan is practically extinct unless you’re a government employee,” said Michael. “People are living significantly longer, which has been a driving force of why pensions have gone away.”

About 4% of the private sector still offers pensions, which is down from 60% in the 1980s. So, how are people saving for retirement these days?

If you are a 65-year-old married couple today, there’s a 50% chance that one of you is going to live past the age of 94. So, if you retire at 65, you need to plan on having income for 30 years, at least.

It takes a savings rate of 20% consistently and systematically of your gross income through time to position yourself to have enough capital for retirement down the road. And then once it comes closer to the distribution phase of your retirement, you need to likely create your own guaranteed income sources

It’s good for retirees to have all of their monthly expenses or regular monthly expenses covered by guaranteed income. It takes a lot of pressure off the rest of their retirement assets and can open those up for other goals.

Listen to the full podcast or use the timestamps below to jump to a specific section.

Navigating the Show

[1:10] – Pensions becoming extinct

[4:12] – Other sources of income

[9:00] – Inflation

[10:32] – Pension buyout

[12:12] – Savings adjustments

 

People are living significantly longer, which has been a driving force of why pensions have gone away.

– Michael Schulte

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Copyright 2020 Saving The American Dream Podcast. Michael Schulte is an investment advisor representative and certified exit planner with WestPac Wealth Partners, located at 330 South Center Street, Suite 344, Casper, Wyoming 82601. The podcast is for informational purposes only. Individual risks and investment objectives must be reviewed prior to making any recommendations. Podcasts are for informational purposes only. Any guest speakers and their firms are not affiliated with or endorsed by PAS, Guardian, or WestPac Wealth Partners and opinions stated are their own. Guardian, its subsidiaries, agents, and employees do not provide tax, legal or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Michael is a Registered and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 5 Centerpointe Dr Suite 150, Lake Oswego, OR 97035, 503-207-4550. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. WestPac Wealth Partners is not an affiliate or subsidiary of PAS or Guardian. 2022-140225 Exp 7/24