In a previous Retirement News Today report we told you about a BlackRock Retirement Institute and Employee Benefit Research Institute study that found the majority of current retirees are aren’t touching their nest eggs and are living on other sources of income instead. But, as we mentioned, future retirees may not be as lucky since they face a much different, uncertain retirement environment. The study found 6 major challenges future retirees will have to deal with:
- Pension benefits are disappearing. The study found 42% of current retirees received income from a defined benefit pension. Workers retiring over the next 10-20 years likely won’t have income from a DB plan.
- Social Security benefits may go away or decrease.
- Most future retirement savings are tax-qualified vehicles and would need to be tax-adjusted upon distribution, as opposed to current retirees whose retirement assets were post-tax, before tax-qualified vehicles.
- Rates of return will be lower. The report found over the past 35-plus years asset classes have delivered robust returns in the form of asset appreciation and interest income, but that’s not the expectation in the future.
- Future retirees will need to save more and be more confident about withdrawing from retirement assets.
- People are living longer and longer and in turn their retirement assets will have to last longer.
If this list has you worried, consider enlisting the help of a financial adviser, who can help put you on track to a secure retirement.