Retirement planning today has taken on many new dimensions that never had to be considered by earlier generations. For one, people are living longer. A person who turns 65 today could be expected to live over 20 years in retirement as compared to a retiree in 1950 who lived, on average, an additional 15 years. Longer life spans have created a number of new issues that need to be taken into consideration when planning for retirement.
Lifetime Income Need
There actually is a lifetime after retirement and the need to be able to provide for a steady stream of income that cannot be outlived is more important than ever. With the prospect of paying for retirement needs for over 20 years, retirees need to be concerned with maintaining their cost-of-living.
Health Care Needs
Longer life spans can also translate into more health issues that arise in the process of aging. The government provides a safety net in the form of HIPP, however, it may not provide the coverage needed especially in chronic illness cases. Planning for long-term care, in the event of a serious disability or chronic illness, is becoming a key element of retirement plans today.
Planning for the transfer of assets at death is a critical element of retirement planning especially if there are survivors who are dependent upon the assets for their financial security. Planning for estate transfer can be as simple as drafting a Will, which is essential to ensure that assets are transferred according to the wishes of the decedent. Larger estates may be confronted with settlement costs and sizable death taxes which could force liquidation if the proper planning is not done.
Paying for Retirement
Retirees who have prepared for their retirement usually rely upon three main sources of income: Social Insurance, individual or employer-sponsored qualified retirement plans, and their own savings or investments. A sound retirement plan will emphasize qualified plans and personal savings as the primary sources with Social Insurance as a safety net for steady income.
Social Insurance was established as a safety net for people. After paying into the system from their earnings, they could rely upon a steady stream of income for the rest of their lives. The age of retirement, when the income benefit starts is age 65 which is referred to as the “normal retirement age”.
Employer-Sponsored Qualified Plans
Most employer-sponsored plans today are established as “defined contribution” plans whereby an employee contributes a percentage of his earnings into an account that will accumulate until retirement. As a registered plan, the contributions are deductible from the employee’s current income. The amount of income received at retirement is based on the total amount of contributions, the returns earned, and the employee’s retirement time horizon.
Group Retirement And Savings Plans
For business owners, group retirement and savings plans can play a key role in attracting and retaining quality employees.
Just like you, your dedicated employees are working towards a safe, secure future. Either provided independently or paired with group benefits, a group savings plan is a convenient, flexible and affordable way to help your employees reach their long-term financial goals.
- Registered retirement savings plans designed specifically for groups
- Deferred profit sharing plans
- Defined contribution pension plans
- Non-registered savings programs
Contact us today to learn about how group retirement and savings plans can benefit your business.