Tag: retirement benefits

retirement benefits

Retirement benefits are the monetary and other benefits and incentives provided to the retired officers and employees of the government.

EPA Offering Buyouts to Reduce Personnel

It seems that many agencies are accepting president Trump’s idea of reducing the number of federal employees and the EPA Offering Buyouts is proof positive that Trump’s vision of a smaller government is becoming a reality. The Environmental Protection Agency has recently initiated steps to buy out certain personnel. The EPA has decided not to hire more workers unless it becomes necessary. It is believed that the agency may offer voluntary retirement as well. The impact of these changes on retirement benefits and federal retirement can just be guessed right now because no one knows the exact impact.

EPA Offering Buyouts
The EPA has begun offering buyouts to reduce the number of Agency employees

How the EPA Offering Buyouts Will Impact the Agency

The EPA has begun offering buyouts to reduce the number of federal employees in the Agency. The Agency has about 15,000 employees at the moment. This decision was probably taken because of an executive order by President Trump that was released last month and talked about streamlining agencies through the federal government.

How was the Message of Reducing Federal Employees at EPA Conveyed?

The message of reducing federal employees was conveyed via a letter sent by the Acting Deputy Director of EPA, Mike Flynn. This letter was sent to all the regional administrators. The content of this letter stated that the White House had asked federal government agencies to start taking immediate actions that are aimed at reducing the workforce.

The letter further stated that as per the said guidance, the EPA offering buyouts to start an early buyout or early out program. Flynn also mentioned that the goal was to complete the program by the end of the year.

No Hiring

Flynn also mentioned that though the governmentwide hiring freeze has been lifted, new recruitments at the EPA will not be encouraged. The resource situation of the agency is such that it has to opt to stay away from external hiring.  This hiring freeze is not aimed at restricting recruitment for all the positions as there can be limited exceptions that are permitted on a case-by-case basis.

Setting of a Trend

Though the memo has minimal details about the agency’s plan to reduce the number of federal employees, it can be probably one of the several plans that will be submitted by various agencies.

Targeted Approach

It is also a fact that EPA has been a central target of the Trump administration as the President of the country, Donald Trump had earlier promised that he would reduce the agency to tidbits. The budget he has proposed would slash the funding of the agency by 30 percent and cut around 3200 federal employees. It will also obliterate funding for Superfund cleanups, climate change research and scrap over 50 programs. The efforts being made towards improving the energy efficiency, cleaning up the great lakes and funding infrastructure projects in the Native American communities are among the scrapped plans.

Understanding the Buyout

Those of you who don’t fully understand what the EPA Offering Buyouts will mean to federal employees must know that buyout is also known as a voluntary separation incentive payment. It is a cash payment that is made to a federal worker to tempt him or her to leave voluntarily. The maximum amount of money that can be offered per person is $25,000. This payment is taxable which means that the take-home value is reduced by a few thousand dollars at least.

Federal workers who are selecting this option must leave by a specified date, and they are not allowed to return to federal employment within five years unless they manage to repay the entire pretax buyout amount.

Is Early Retirement Offers on EPA Agenda?

In most cases, the buyouts are coupled with early retirement offers, but in the case of EPA, it is not clear whether they are on the agenda or not. For those of you who don’t know, Voluntary Early Retirement Authority lets federal employees retire before they reach the standard combinations of years of service and age.

The two most vital federal retirement systems are Federal Employees Retirement System and Civil Service Retirement System. The latter applies to people who were hired before 1984 which consists of less than 10 percent of the workforce. These people are now older and closer to retirement on an average.

Early retirement offers allow employees in either of the two systems to retire at any age with 25 years of service or age 50 with 20 years or service. It is potentially subject to a reduction in one’s retirement benefits.

Why are Layoffs Unpopular?

Laying off the federal workers or Reduction in Workforce is not preferred by federal agencies because it requires a tedious, expensive and disruptive process. RIFs have been out of trend as Agencies have not used them for decades and they try to avoid them. Agencies prefer other methods like cutting down the travel and other expenses as well as cutting down the feds via attrition.

Conclusion:

Federal employees have been under the scanner since President Trump took over. The attempts to reduce the number of feds have been initiated at EPA by offering buyouts. The agency may also offer early retirement options which may badly impact retirement benefits and federal retirement.

Retirement Assets Reach Over $19 Trillion in 2016

Per recent data shared by the Federal Reserve, retirement assets reach over $19 trillion. This data demonstrates the seriousness that people are approaching their retirement financial planning. Have a look at the numbers and see how the assets are doing when they are classified into various categories.

Retirement Benefits

Retirement Benefits Fund Assets for DB and DC Plan Also Grew

The data shared by Federal Reserve also states that retirement fund assets for Defined Benefit Plan and Defined Contribution Plans (like 401(k)s and the Federal Government’s Thrift Savings Plan) have also grown a lot in the last year. The total assets across the public and private defined contribution (DC) and defined benefit (DB) plans grew by 8 percent. It was $17.6 trillion in 2014, and retirement assets reach over $19 trillion in 2016.

Total financial assets available in private and public DB pension plans were $12.4 billion in 2016. It has increased by 8 percent as it was just 11.5 trillion in 2014. Similarly, the total financial assets in DC plans were $6.7 trillion in 2016. It is up by 10 percent from $6.1 trillion in 2014.

Private DB pension plan assets in 2014 were $3.2 trillion. They were at $3.3 trillion in 2016 which shows an increase of 3 percent. Private DC plan assets in 2014 were $5.2 trillion, and they grew by 9.6 percent in 2016 to stand at $5.7 trillion.

Pension Funds’ Biggest Asset Class Holding

When discussing the performance of retirement benefits fund assets, it is vital to consider pension funds’ largest asset class holding. The largest asset class held by pension funds was corporate equities as it was $4.8 trillion. It is closely followed by debt securities and mutual funds which stand at $3.9 trillion for both of the asset classes. The fourth biggest holding of pension funds in 2016 was Treasury Securities that stood at $2.3 trillion.

Government’s Assets

When reviewing the performance of retirement benefits fund assets, it is essential to see how the assets of the federal government have performed. The DB plan assets of the federal government were $3.4 trillion, and DC plan assets in 2016 were much less than that as they were just $466 billion. DB plan assets of state and local governments were just $5.6 trillion in 2016 while DC plan assets of state and local governments were just $490 billion.

Looking at the Flows

Debt securities were the biggest purchase of private and public DB plans in 2016 as they were around $190 billion, followed by Treasury Securities that were $120 billion and Corporate and Foreign Bonds at $61 billion.

For all the private DC plans, the highest numbers of inflows in 2016 were to mutual funds, at $24 billion. It was followed by debt securities at $22 billion and corporate and foreign bonds at $12 billion.

For the DC plans of federal government, the biggest purchasers in 2016 were debt and treasury securities as both were at $16 billion. They were followed by assets in the Thrift Savings Plan that were about $12 billion.

The biggest purchases of local and state DC plans in 2016 were unallocated insurance contracts at $8 billion and miscellaneous assets at $7 billion.

Conclusion:

The data shared by the Federal Reserve regarding retirement benefits fund assets is a good source of information for investors who wish to understand how these large plans are investing their asset, which may lead to an understanding of how these money managers perceive the economy and the potential investment risks that lie ahead.

What’s the Future of Federal Employees’ Benefits?

Under the Trump administration, federal employees are scared of losing their retirement benefits, compensation, and child care benefits. They are also afraid that if Trump cuts down on federal employees’ benefits, it will ruin their financial planning. Here we try to evaluate who’s planning to cut the benefits and who is protecting them. We also get to know about the current status of the proposal to offer more child care leave to the federal workers.

federal employees

Which of the Federal Employees’ Benefits are in Danger of Being Cut?

In a recent statement, the White House has signaled that President Trump will overhaul federal employees’ benefits like compensation and move the work to the private sector. These efforts are being named as efforts to innovate and update government. Press Secretary Sean Spicer has also stated that Trump is going to have a hard look at salaries, promotions or programs of the federal government. He will soon know how the government is being operated, how many positions they are in and what people are getting paid.

Defending Federal Employee Benefits

A group of Democrats has already united to protect the rights of the federal workers. Mazie Hirono, D-Hawaii has introduced a resolution, S. Res. 51 in which the aim is to recognize the contributions of federal employees. The group has also vowed to fight back against all resolutions that have a potential to erode fair compensation for the feds by cutting pay, reducing the overall federal workforce unnecessarily or irresponsibly and raising health insurance premiums.

The senators defending the feds also stated that they would fight back the efforts to reduce retirement benefits, outsource inherently governmental work, undermine federal employee unions and eliminate due process rights for federal employees. The resolution has gotten support from there more senators, and now 15 senators support it.

Apart from the senators’ group, there are many other separate movements that are fighting the hiring freeze imposed by the Trump government. For instance, some House Democrats are aiming to ensure that all veterans are excluded from the hiring freeze directive.

Child Care Leave for Federal Employees

Amid all the changes mentioned above, a Federal Employees Paid Parental Leave Act was recently reintroduced by a bipartisan group of lawmakers. It would let civil servants enjoy six weeks of paid time off after the birth, adoption or fostering of a child. Currently, the new parents are eligible for 12 weeks of leave under the 1993 Family and Medical Leave Act but the time is not paid.

Former President Obama had signed a memorandum in January 2015 that directed agencies to advance up to six weeks of paid sick leave to federal employees so that they could care for a child or a family member who is ill. He also supported extending six weeks paid leave. Rep. Carolyn Maloney, D-N.Y. took the lead in the house and had been taking this initiative for 15 years. Unfortunately, she failed as the legislative efforts were stalled during the last Congress.

The Hope

Hopefully, the bill protecting federal employees’ child care benefits will be passed as Republican Rep. Barbara Comstock has joined in to support the bill. Till now all 46 sponsors of the bill have been Democrats. Comstock is representing a federal employee-heavy district in Northern Virginia. She has also signed on, and she is helping to spearhead the effort with Maloney.

Comstock stated that when she was a federal employee and a young mom, she was acutely aware of the balance between building a career and raising a family. This is the reason she is teaming up with Congresswoman Carolyn Maloney, who believes that extending the paid parental leave as a part of federal employees’ benefits will help in reducing the risk of real economic hardships. It will also retain the best federal employees who may otherwise switch to jobs in the private sector.

Interestingly, the bill may also get support from a member of the White House. Ivanka Trump, the daughter of President Trump, has said that she will make family issues like maternity leave a priority. Maloney has reached out to Ms. Trump regarding the bill and garnered a positive response. Ms. Trump said she was interested in talking about the bill. Though Ivanka is yet to get back to Maloney, the hopes are high yet.

Conclusion

It is clear that though many federal employees’ benefits like retirement benefits, compensation, leaves may be under scanner of the new government, it will not be easy to curtail them. But it is advised that all federal workers do the financial planning cautiously as unforeseen and dramatic changes may be in store for the future.

Too Little Too Late With Social Security Legislation?

Many people believe that social security runs out of money in the next few years. Given the importance of Social Security, this risk is not something most people can ignore. American senators are aware of this fact too. This is the reason Sen. Bernie Sanders (I-Vt.) has rolled out Social Security Legislation that bolsters social security payments and ensures that high-income earners pay more towards the retirement benefits system.

social security

Who Introduced the Social Security Legislation?

The legislation that bolsters social security payments was rolled out by Sen. Bernie Sanders (I-Vt.) and is legislation that ensures that people who earn a high income are paying more towards the social security system so that everyone can benefit from it. Sanders also made a claim that anyone who claims that Social Security is going broke is lying as social security benefits can be increased for millions of Americans. He went on to say that the long-term viability of social security could also be improved. Both these solutions are only possible if people have a political will to ask the wealthiest Americans to pay more than they currently are.

Effects of the Social Security Legislation

If implemented, this new Social Security Legislation would increase the social security for seniors, including current and former Federal Employees who make less than USD 16,000 by around USD 1,300. It will also boost the amount of taxes paid by the high-income earners by subjecting incomes of more than $250,000 to payroll taxes.

Overwhelming Majority

While talking about the legislation he introduced, Sanders mentioned that the proposal has an overwhelming majority of support in both parties. He pointed to the Public Policy Polling survey conducted in October 2016 that found that over 72 percent of people in America support the increasing of the entitlement program.

On the other hand, Rep. Peter DeFazio (D-Ore.) is seen introducing the House version of this bill.

The Solvency

There is a dire need to increase the social security payments as the trust fund of social security is expected to be solvent through 2034 after which it is estimated that the social security will be able to pay only 79 percent of the benefits due.

If Sander’s legislation is passed, the solvency will increase through 2078. This was mentioned in a report offered by the social security administration. The bill, if introduced will also increase the monthly social security payments for most of the beneficiaries by only $43 per month starting at age 80 and $73 starting at age 90. This breakdown of the bill was provided by Sander’s office.

Speaking Against Trump

Sanders also blasted President Trump recently from the Senate floor and argued that the picking budget hawk Rep. Mick Mulvaney (R-S.C.) as the budget chief was out of the line as it is not according to Trump’s campaign pledge to not cut Medicaid, Medicare or Social Security.

Sanders said that if, then, candidate Trump had run his campaign by saying that he is going to cut the social security payments if elected as President, Congressman Mulvaney would have been the right person he should bring forth as the Director of the Office of Budget and Management.

Conclusion:

All in all, it can be seen that the Social Security Legislation introduced by Sander’s would help in boosting the social security payments in the future, even if by only a very small amount for the average recipient. It will also ensure that people who earn more than others pay more towards the retirement benefits system. If this bill is passed, one of the most feared social security facts, SSA running out of money would be postponed, and people would get some relief.

Federal Retirement Tsunami Still a Myth?

People feared that the much-talked about federal retirement tsunami will hit this year as many of the federal employees who are eligible for retirement would opt for retiring and enjoying their Federal Annuities at home. It was also believed that feds who don’t want to work under Trump administration would opt to retire. Fortunately, none of this has happened as per OPM data. Just one noticeable thing has occurred, the retirement benefits backlog of OPM has increased again.

federal employees

Who Says Federal Retirement Tsunami Didn’t Hit?

The data revealed by OPM clearly indicates that the much-talked about federal retirement tsunami has failed to hit this year as well. Only 15,317 feds opted for retirement in the first month of this year. January is usually the month when most federal employees file for a retirement so no one was shocked when this number increased 15,300. In fact, people were a bit disappointed as the number of feds opting for retirement has fallen by about a 100 as compared to January last year. Another point that must be mentioned here is that the numbers of January 2017 fell short by over 3,300 in January 2015.

Federal Retirement Backlog

As expected the increase in the number of retirees in January though not enough to be considered a federal retirement tsunami has increased the ever-growing backlog of OPM, which is currently more than 23,000 claims behind. It is at the highest point since February 2015. At that time, it had exceeded 24,000. February usually witnesses the second highest number of claims and this comparatively smaller surge results in producing the highest backlog of the year.  At the moment, the backlog inventory is more than 10,000 claims higher than the steady state inventory of OPM. For those who are unaware, the steady state inventory is 13,000.

The Progress

Though the federal retirement tsunami did not occur in January 2017, it seems the OPM was expecting it. The reason being the agency has succeeded in processing more than 7,000 retirement claims in January 2017.  Unfortunately, the speedy processing of claims in January 2017 is not enough to enhance the agency’s position ahead of the January surge partly due to its dreary progress in the last months of 2016.

More Facts

The percentage of retirement claims processed in 60 days or less has declined to 51 percent which is at an all time low since May 2014. It was in May 2014, that the agency started tracking this statistic. The monthly rate of claims processed in less than 60 days time fell to 39 percent. As per data, the average number of days it took to process a case rose to 53 which is a 16-month high. OPM succeeded in making progress in reducing the average number of days it took to process a case in over 60 days. That number fell to 89 and it’s the lowest since October 2015.

Retiree Data

In the year 2016, 93, 713 federal employees opted for retirement. This figure is high but is nowhere close to being called a federal retirement tsunami. In 2014, the Government Accountability Office had predicted that around 600, 000 federal employees that constituted 31 percent of the federal workforce would be eligible to retire by September 2017.

The Prediction

A number of experts suggested that the presidential transition could lead to a federal retirement tsunami or at least a higher turnover in the federal workforce that would drain federal agencies of a majority of their workforce and institutional knowledge. The prediction of the retirement tsunami was made in the 1990s when first of the baby boomers began approaching the retirement age at the same time when the hiring of young federal workers slowed.

The Survey

In the months leading up to the presidential election, many federal workers stated that they were uncertain about the retirement plans. In a survey, about 35 percent of the respondents even stated that the transition would be a key factor in deciding their retirement plans. At least 18 percent respondents admitted that they would make a decision regarding the retirement only when the result of the election was clear.

Future Prospects

As per the latest data made available by the OPM, on September 2015, more than 45 percent of federal employees are more than 50 years of age. The same data states that just seven percent feds are younger than 30 years of age. The average age of a federal employee is 47.4 years. This data may be a sign that the federal retirement tsunami may hit in the future.

Conclusion:

It is evident that the federal retirement tsunami hasn’t hit due to the recent presidential election results. It can be assumed that federal employees might value their annuities or retirement benefits but they still don’t want to leave their lucrative jobs just because the head of the oval office has changed.

How are Federal Employees’ Benefits Expected to Change Under the New Administration?

Whenever the administration of the country is changed, one of the key issues that pop up in the minds of the federal employees is that how will the new government reform the federal employees’ benefits. Would FERS retirement or Federal Employee Health Benefits remain the same? Would feds be able to get a pay raise? Here we try to get answers for all these questions.

federal employees

Which Federal Employees’ Benefits are Expected to Change as per Indications?

If the indications offered by the new government are of any value, there are a lot of changes that will be related to the federal employees’ benefits. Let’s begin by having a look at whether feds can expect a salary increase in 2018 or not. Many people in the congress believe that federal employees’ benefits are too high and way beyond what’s offered in the private sector.

White House Press Secretary Sean Spicer has already stated that federal workforce has expanded by a significant number in the last two administrations as it went from 1.8 million to 2.1 million. He also said that the federal employee health benefits and retirement benefits are even now based on antiquated assumptions. The level of generosity of these benefits has long since abandoned in the private sector. The costs of the federal employees’ benefits are unsustainable for the federal government.

It is believed that if there is a pay rise in 2018 at all, it would be very small and the amount of the raise could also be tied to the performance ratings.

Making it Easy to Fire a Federal Worker

The Merit Act of 2017 that’s got 12 co-sponsors and is in the House of Representatives aims to ensure that a federal employee could be easily fired for a misconduct or lack of performance. This bill is referred to the House Committee on Oversight and Government Reform.

FERS Retirement System

The likelihood of changing the core one among federal employees’ benefits, the FERS retirement system is very high. Many of the Congress members believe that the federal retirement system is too generous. A report had recently noted that the federal government contributed up to 18 percent of federal employees’ retirement which includes the thrift savings plan contributions. The same report mentioned that the private sector companies contribute just three of five percent to the pension programs.

One recent proposal says that the federal government contribution should be reduced to eight percent instead of 18 percent. This proposal would be harmful to the new feds who have yet to join or those who have less than five years of service.

Federal Health Benefits

A proposal has also been made to eliminate the federal subsidy for retiree health benefits of the new hires. As the federal government continues to offer FEHB plans to federal employees who retire, a way to cut down on the expenses of federal government would be to eliminate FEHB subsidized health insurance coverage after a person retires.

Another proposal says that the federal subsidy for retiree health benefits for new feds should be eliminated. As per this proposal, the federal government would continue to provide access to FEHB benefits in retirement. The employee would be responsible for paying the total cost of the premiums. It is a fact that the government subsidizes a large percentage of the cost of FEHB health insurance, the result would probably include shifting many of the new retirees to Medicare.

Federal Labor Relations Program

When all the federal employees’ benefits are under scanner, it is also likely that the federal labor relations program will also be changed. One of the most likely changes would be to place restrictions on how a person uses the official time. A GAO report, released recently stated that there was no accurate recording and reporting of the official time in Department of Veterans Affairs. It is highly unlikely that the Department of Veterans Affairs is the only one department where the time is not reported or recorded.

So, Congress may pass restrictions on federal employees using the official hours to work for any union. In all probability, there will also be restrictions on using government facilities for union activities. The appeal options available to federal workers may also be restricted in the future.

Conclusion:

Well, after reading the aforementioned information it would be right to assume that many federal employees’ benefits are really in danger of being removed or changed drastically. But before a federal worker starts worrying about the salary hike, FERS retirement changes or Federal Employee Health Benefits, one should realize that changes always occur with any new administration. Sometimes, the fear of change can turn out to be worse than the change itself. Hence, one should not fear the change. One should remember that there are people out there who have the best interests of the federal workers in their hearts and they will work towards making these changes more acceptable.

Men and Women have a different approach to Retirement Benefits: Survey

The perception of men and women towards retirement and retirement benefits is totally different from one another. It was revealed in a report released on the basis of the Voices of Experience Survey. The survey also revealed that women plan to invest in the retirement plans at a later age and they plan to spend their retirement time by doing socializing, taking care of family and looking after their personal interests.

retirement benefitsRetirement Benefits Aspect of the Survey

The Survey was conducted by TIAA (formerly TIAA-CREF). The aim of the survey was to find out how people prepare for retirement, how soon they start investing for retirement benefits and to get an idea about the changing attitudes of people on life in retirement. The survey highlighted how men and women plan for their retirement financially and how they want to spend their retirement time.

The survey revealed that 22 percent of men started investing towards retirement benefits funds before the age of 30. Only 12 percent women did the same.

Satisfaction with Finances

The survey also revealed that men would be happier with their financial health when they retire. 58 percent men admitted to the same. Women, on the other hand, were less sure of it. About 46 percent agreed to it.

Spending Retirement Time

80 percent women would prefer to spend their retirement time for personal interest while just 70 percent men want to spend time in such a manner. 80 percent women also planned to spend time with family and just 67 percent men want it. 75 percent women want to socialize when they have taken retirement while only 52 percent of men want socializing after retirement.

58 percent women want to volunteer when compared to men as only 42 percent men are interested in volunteering after retirement. 43 percent women wish to care for their family members and just 26 percent men want to take on that responsibility. 36 percent women were inclined to participate in religious activities after retirement while only 25 percent men have planned to do the same.

Craving Company but not Dependency

Men and women have the same perception about having enough retirement benefits so that they don’t become a burden on others. Women also had more fear that they would be a burden on others by having no money when compared to men. 29 percent women fear it while just 14 percent men fear it. 19 percent of women were very concerned about being lonely and about 11 percent men think the same.

Many American Physicians not Prepared for Retirement and have less Retirement Benefits Savings

A new study has found that a large chunk of the physicians in America are unable to meet their retirement goals and they are behind schedule with regard to retirement benefits savings. Those who are better prepared for retirement and are ahead of schedule say that they have better knowledge of financial matters. They also have better financial health and confess to the fact that they make use of the services rendered by financial advisors.

retirement benefits

Being Behind the Schedule for Retirement Benefits Savings

A study conducted by American Medical Association Insurance that was entitled 2016 study on physicians’ financial preparedness found out that the percentage of American Physicians who said that they were ahead of schedule in their retirement plans from 2013 to 2016 has doubled. It went from 6 percent to 11 percent. Unfortunately, the same study has found that about 40 percent of American physicians admit to being behind schedule when it comes to retirement benefits savings.

The Study

The study was conducted in about 125,000 practicing physicians. They had varied age, employment situation, and specialty. It discovered that physicians can be financially prepared for the retirement at any age so age is not a valued factor. It stated that 7 percent of physicians who are on their 30s are ahead of schedule. It added that 11 percent of physicians in their 40s and 13 percent in their 50s were also ahead of their retirement schedule.

Being Financially Educated

The researchers found that the physicians who were financially prepared were eight times more likely to claim that they have better knowledge on financial matters such as insurance, investing, retirement planning, etc as compared to the physicians who admitted to being behind their retirement schedule.

Taking Help

About 67 percent of physicians who claimed that they are ahead of the retirement schedule said that they took the assistance of a financial advisor than 44 percent of physicians who are behind.

Better Financial Health

The physicians claiming that they are ahead of the retirement schedule and have better retirement benefits savings also have more money saved as compared to other physicians in their age and career stage. They also max out their qualified retirement plan contribution, have fewer debts, have the real estate plan well-defined and have more diversified investments. On the whole, they have better financial health.

Few Federal Employees are Leaving Jobs Due to Election of President Trump

Before the presidential elections took place last year, many federal employees were of the opinion that they would leave their jobs if presidential candidate Donald Trump was chosen for the oval office. Well, the elections are over now and he is the new President. But are the feds leaving their jobs? No, because they probably like the comforts of a government job as well as the annuities they get as a part of FERS retirement system.

federal employees

Surveys Said Many Federal Employees May Leave if Donald Trump becomes the President

There were many surveys in which many federal employees stated that they will leave the job if Donald Trump comes to power. In one survey, 25 percent federal workers said that they might leave if he comes to power. In another survey, only 65 percent of the feds said that they would commit to keeping their jobs if he came to power. As many of the federal workers are older, one expects the federal retirement numbers to see a jump in January. But did it happen?

January Numbers Did Jump

OPM has reported that the January numbers have jumped dramatically and the number of backlogged applications was up by 53 percent in January as compared to the last month, i.e., December 2016. After seeing these figures one assumes that the feds are keeping up with their opinion of leaving a federal job post retirement. But all is not as it seems.

But Not Much

These figures are not much when one considers the fact that an annual surge of retirements always takes place in January as most feds decide to quit in the final month of the year. While one remembers the fact, it can be seen that the figures in January 2017 are actually lower than the previous five years.

In the data shared by OPM, it was highlighted that the number of new retirement benefits claims of federal employees was 15,317 in January 2017 while they were actually higher, 15, 423 in January 2016. In January 2015, they were at 18,629 while in January 2014, they were 17, 383. These numbers were 22, 187 in January 2013.

Older Feds Will Dominate

As per the figures of September 2015, almost 28 percent of the federal employees were 55 or older than that. Many of the federal workers opt for leaving the service when they qualify for federal retirement pension. Even when that happens, 25 percent of the US workforce will comprise of people who are 55 years of age or older in 2020.

The Love for Federal Jobs

One of the reasons why people stick to federal jobs no matter whether they like the new president or not is that they receive a retirement annuity for the remainder of their lives. The federal retirement system is so lucrative that people love it immensely.

How Many Ineligible Federal Employees Retired Post Election

Unfortunately, the data on the number of federal employees who retired post-election without being eligible is not revealed yet. It will be sometime later when people will get to know that how many of the recent retirees were eligible for it and how many took retirement without even being eligible just because they didn’t like the new president.

No Surge Foreseen

Given the recent federal retirement application data, it is clear that many federal employees are not planning to retire in bulk due to the presidential election. If that were to happen, it might have happened till now.

Not a Lie

Some people may assume that as the federal retirement figures didn’t jump drastically post-electoral results, many federal employees (of the 35 percent who said that they would retire if Donald Trump wins) were lying. It is a misconception, people should realize that the respondents probably didn’t shift their loyalties and might have voted for Hillary Clinton, the Libertarian candidate or the green party candidate. Some may have actually retired earlier than planned.

Just an Opinion

It is highly probable that many federal employees were just expressing their political opinion in a dramatic manner while answering the survey questions. Some of them might even have hoped that the answers they are giving might steer other voters away from President Trump. Some may even think that they would resign but couldn’t resign due to financial responsibilities or other such reasons.

Simply put, the federal employees might have thought that the election results were one of the reasons for leaving but it was not the main or the only reason for quitting a lucrative job with numerous benefits. They might have also changed their minds later on.

It is also possible that the government will lose many federal employees who are young and don’t like the election results.

Conclusion

It can be seen that though many federal employees don’t like the fact that Donald Trump is their new president, they are not considering quitting due to the benefits like annuities offered by the FERS retirement system.

Retirement Education is the Key to Better Retirement Benefits: Study

A recent study has revealed that employers who wish for better retirement benefits for their employees must train their employees on retirement savings. The study also revealed that boomers and low-income workers were the worst among those who got an education on this issue. The study also revealed that most people depend on family and friends for retirement advice.

retirement planning

Less Stress and More Retirement Benefits are Interrelated

The study was conducted by Dave Ramsey’s Ramsey Solutions. It found out that the employees who have better retirement education and more savings have less stress and more confidence as compared to people who have got no retirement education.

Age and Income

The study also exposed the fact that age and income of the workers also play a crucial role in retirement education. About half of the boomers accepted that they weren’t getting any retirement education from their employers. This percentage was about 39 percent for Generation X people and about 33 percent of millennials.

About 64 percent of low-income workers have admitted that their employers have offered them no retirement education till date. Nearly 43 percent of middle-income workers have also agreed to the same. Overall, about 40 percent of workers have no access to retirement education through their employers.

Money Matters

The study has also found that money plays a crucial role in predicting whether the employees are getting any retirement education or not. About 47 percent of people who have saved $250,000-$999,999 for retirement accepted that their employers educated them on retirement. Unfortunately, 7 out of 10 workers admitted that they have no access to retirement education from their employers.

Sources of Retirement Education

Only 35 percent people stated that they relied on the employers to provide them with retirement saving related education. About 32 percent people admitted that they got retirement education from family and friends. The survey also discovered that workers who got the education from family and friends were saving less or no amount towards retirement. About 47 percent of people who had no retirement savings said that their primary source of retirement education were friends or family.

Retirement Education and Emotions

The survey also uncovered the fact that people who got retirement education through their employers and saved towards some form of retirement benefits had feelings like excitement, about 49 percent, and optimism, about 40 percent. People who had no education from employers felt anxiety, about 47 percent, and fear, about 40 percent.

6 IRA Myths that Prevented You from Increasing Your Retirement Benefits Busted

When you are planning your retirement, you obviously look for an option that let you grow your retirement benefits easily. One such option is to put your money in an individual retirement account or IRA. But some people fail to invest in this plan despite wanting to because there are so many myths going around. Here we are busting the 6 IRA myths to help you clear your doubts and make better investment decisions.

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List of 6 IRA Myths that Prevented You from Increasing Your Retirement Benefits

  1. You cannot contribute to traditional IRA, Roth IRA and a 401(k) in the same year

This myth has prevented many people from increasing their retirement benefits to a maximum limit. Let’s get real, people. You are free to invest in all the accounts if you stay within the annual allowable limits. When you are a part of the employer sponsored retirement plan, you can contribute up to $18,000 and an additional $6000 if you are more than 50 years of age.

You can also contribute to the traditional and Roth IRA on top of that given the total amount in all the plans is not beyond the maximum annual allowable contribution limit of $5,500. You can even add a $1,000 catch-up contribution in case you are older than 50. Adding it all up, it is clear that a saver could save about $23, 500 a year or $30,000 for people who are more than 50.

  1. Big earners cannot contribute to an IRA

It is a fact that if you earn more than $196,000 if you are married and $133,000 if you are single, you cannot contribute to a Roth IRA. But even if you earn a massive check, you can still contribute to traditional IRA. The only thing worth remembering here is that the IRS takes into account your household income and the fact whether your spouse has access to a workplace retirement plan or not while deciding the amount of your IRA contributions.

  1. IRA is not worth it if a person doesn’t qualify for a deductible amount

Though the upfront tax deduction of IRA often gets all the glory, it is a valuable fact that all investment within IRAs grows tax deferred. It is true for non-deductable IRA’s too. So you don’t have to pay any income the retirement benefits savings you do via IRA until you withdraw the money in retirement.

  1. Low earning spouses are not eligible for contributing to an IRA

If you are a stay at home parent or you are married to someone who has a hard earned income and you file a joint tax return, then you can save more towards your retirement benefits via spousal IRA. As per this rule, you can contribute to a Roth IRA or a traditional IRA or the contributions can be made on your behalf. Just remember that the IRA must be set up in your name rather than your earning spouse. The eligibility and the deductibility would be based on what is applicable to the spouse who has a higher compensation.

  1. You should use the IRA only when you retire

Though you must try not to touch your IRA account until you retire and need the retirement benefits for surviving, there are a few exceptions to this rule. You can get a waiver on an early withdrawal penalty on traditional and Roth IRA if you are going for a first time home-purchase or you are paying for certain qualified expenses pertaining to higher education. If you need the money for the reasons other than these, you would be smart to opt for withdrawal from Roth IRA because it is more flexible than 401(k) and traditional IRA. You should remember that the IRS allows penalty and tax free withdrawals of contributions from Roth IRA for any reason and at any time.

It is highly recommended that you let the retirement benefits savings as they are for as long as possible. If you are younger than fifty nine and a half years, you will have to face 10 percent early withdrawal penalty and even an income tax IOU. It’s better to avoid both if and when you can.

  1. The deadline to contribute to IRA for the 2016 tax year has passed

This is a big fat lie. The tax filing deadline is April 18, 2017. You have more than two months to contribute to an IRA for tax year 2016 and increase your retirement benefits savings. Always remember to indicate that it’s your 2016 contribution while adding the money to the account. You are also free to start adding funds to your IRA for 2017. Remember, the earlier you contribute to an IRA, the more time will be given to your money to compound and grow.

Living Expenses Stopping New Yorkers from Saving Enough towards Retirement Benefits

A new poll has stated that Baby Boomers and Gen Xers in New York are not saving enough towards retirement benefits because they are just getting by. Many of them are worried that social security benefits won’t be enough in retirement and still, they haven’t done anything about it. The cost of food, utility bills, and housing costs are a problem for many of the people as it takes out a major chunk of their salaries.

The Poll on Living Expenses and Retirement Benefits

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The poll which states that around 70 percent of Gen Xers and baby boomers admitted that saving towards retirement benefits is a significant problem was conducted by AARP in New York. The Siena College survey for AARP was done on more than 800 New Yorkers between the ages of 35 to 70. The aim of the poll was to help AARP in pressing for federal and state solutions that would solve the problem of the lack of retirement options for all the aging New Yorkers. It concluded that New Yorkers have serious concerns regarding their retirement expenses and income but they are hardly doing anything about it.

Experts’ Speak

The Director of Siena College Polling Institute Don Levy stated that about half of the Gen Xers and Baby Boomers are just getting by and it the best they can do. He added that most Xers and about a third of baby boomers were concerned regarding the social security benefits but only a few of them were doing anything about it.

The Vital Results

The survey also found that 59 percent of Gen Xers have admitted that constantly increasing food costs are negatively impacting the finance of the middle-class people. It also highlighted that the numbers of middle-class Gen Xers who were facing difficulties in managing their finances are three times the number of baby boomers facing the same problems and with similar income.

The Problems

About 39 percent of baby boomers accepted that cost of food is a problem for them. About 58 percent of baby boomers and 68 percent of Gen Xers also said that utility bills were a problem for them. Housing costs were a big problem for 70 percent of baby boomers and 81 percent of Gen Xers. It’s no secret that New York is among the highest costs of living in the nation so the challenge of saving towards retirement benefits is also more complicated.

Americans are Finally Saving More towards Retirement Benefits

A study has recently revealed that the retirement benefits savings of the Americans are actually getting better at the present. The study results also show that people are saving more than they did 5 years ago. Experts say that more savings are a good sign because it implies that Americans are earning more. Generation X people and Millennials are saving more than the baby boomers and silent generation.

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Survey Results regarding Retirement Benefits Savings

The survey was conducted by Bankrate.com some time back but these results were revealed recently. The survey states that 21 percent of Americans have confessed to saving more towards the retirement benefits. They say that their savings were high last year. The level of the savings is highest in the last 5 years. About 17 percent Americans said that they are saving less money towards retirement than they were doing the past year.

The Previous Results

This kind of survey was first conducted five years back. At that time, the people saving more towards retirement benefits were outnumbered by people saving less by about 2 to 1 ratio. At that time, just 15 percent of Americans were saving more than the previous year.  In 2011, 6 percent people said that they are not saving for retirement at all. Unfortunately, this number has not lowered by much in the last five years as 5 percent Americans are still not saving any money for retirement.

The Experts’ Opinion

The Chief Financial Analyst at Bankrate.com, Greg McBride has recently stated that the survey result show that more working Americans are saving towards retirement and the number of Americans not saving is less indicates something vital. It indicates that the economy is improving and people are getting good jobs and earning more. The more they earn, the more they save so the savings have gone up too.

This revelation made by McBride is true as the economy is consistently adding jobs month by month. Even the wage growth has now reached the highest level since the Great Recession.  These factors have also boosted the consumer confidence.

McBride also pointed out that more Americans are now giving a priority to their retirement savings as compared to the past.

Who’s best at Retirement Savings?

The Bankrate survey found that the Millennials and the Generation X people were boosting their retirement benefits savings more than the people belonging to the silent generation and the younger baby boomers.

Baby Boomers and Millennials Equally Use Technology for Retirement Benefits Savings

The use of apps and tools to manage retirement benefits savings is almost equal among Millennials and baby boomers. This was revealed in a recent survey. It also highlighted that the Millennials were far ahead of baby boomers when it comes to using technology to manage health & well-being and their finances. Millennials were also more focused on tracking their heath, diet and sleep via apps as compared to the baby boomers.

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The Survey on Using Apps for Retirement Benefits Savings

The survey was conducted by leading global advisory, brokerage, and solutions company, Willis Towers Watson. It had about 5100 respondents who were U.S. employees. It found out that about two-thirds of Millennials and 66 percent of baby boomers agreed that the mobile apps and tools are vital to keeping track of the retirement benefits savings. About 6 in 10 Millennials (59 percent) also confessed that they use such tools to calculate when they will be able to retire and how much income they can expect after retirement. Around 54 percent baby boomers also feel this way.

Management of Personal Finances

Millennials prefer to manage their personal finances via mobile apps too. About 71 percent accepted it. They use it to pay bills and monitor bank accounts. About 44 percent of baby boomers manage personal finances via mobile apps. Over 57 percent Millennials also confessed that they use price comparison websites to shop for best deals and consider it to be vital as compared to just 42 percent of baby boomers. About 41 percent Millennials also use budgeting tools to monitor their household spending as compared to 18 percent baby boomers. Around 25 percent of Millennials give importance to finance advice websites while just 14 percent baby boomers do it.

Health and Well Being

The survey highlighted that about 33 percent Millennials make use of wearable devices that monitor their health when compared to just 24 percent baby boomers. The survey also discovered that 35 percent of Millennials think that apps that track diet are vital as compared to just 16 percent of baby boomers. About 27 percent of Millennials value apps that monitor sleep habits as compared to just 14 percent of baby boomers.

The Results

After studying the patterns highlighted by the survey, it can be seen that only retirement benefits management is the vital thing that has made the baby boomers adopt more technology as they are not much into technology for managing their health, well-being or personal finances.

About 31% Americans have no Retirement Benefits Savings Again

A recent report has found out several interesting facts related to the financial situations of the Americans. The report says that a substantial number of Americans have no retirement benefits. Te report also reveals that educated Americans who have no loan liabilities are doing slightly better. The report also highlighted the financial concerns of Americans and got a gauge of their ability to pay up for emergencies.

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No Retirement Benefits Savings

The Federal Reserve report on the economic well-being of U.S. households in 2015 was released on Wednesday. In the study, about 31% Americans admitted that they have no retirement benefits at all. These people were non-retired. This percentage was the same in the 2014 study as well.

Doing Okay

Some of the respondents said that they were living comfortably or doing okay. A few even admitted that they were expecting an income growth in the future.

The Socio-Economic Difference

The study also exposed the fact that respondents who had lower levels of income, who were single parents, who were racial and ethnic minorities and the ones who had a student loan to pay off were facing some level of difficulty getting by financially. People who belong to the higher socio-economic circumstances had a greater degree of advancement.

Education Matters

The report also found out that the people who had a bachelor’s degree or higher were more financially comfortable while compared to the previous year. If one of these respondents stated that he was financially worse off, 2 such respondents said that they were doing better. People who have just a high school degree or those who even lack that had mixed opinion on the matter. About half said that they were better off and half said that they were worse.

Emergency Money

When asked about accumulating $400 for an emergency expense, 47% said they would use cash or money from their savings or checking account. About 29% said that they would use a credit card and pay it in the next statement, 17% said that they would use the credit card and pay it in installments while 13% would need to borrow it.

The Financial Concern

The respondents who make less than $40,000 annually are more worried about rent, gas and other regular bills. On the other hand, the people who earned more than $40,000 annually were more concerned about retirement benefits and education expenses.

Majority of American Workers have less than $100,000 Retirement Benefits Savings

A new survey has revealed that majority of American workers have less than $100,000 retirement benefits savings. It includes baby boomers and Millennials as well. Another thing revealed by the report is that many of the American workers have already withdrawn money from the retirement savings or they intend to do so. The report also suggests two major solutions to this problem.

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Survey Says Majority of American Workers have less than $100,000 Retirement Benefits Savings

The survey that says the majority of American workers have less than $100,000 retirement benefits savings was done by a financial services company PWC. It was entitled as the Employee Financial Wellness Survey. It stated that 51 percent of all the American workers have less than $100,000 retirement benefits savings. It also highlights that 77 percent of the people who have $100,000 retirement benefits savings are Millennials and 50 percent of them are baby boomers.

The Withdrawals

The survey stating the majority of American workers have less than $100,000 retirement benefits savings also uncovered the fact that about 25 percent of baby boomers have already taken money out of the retirement savings to meet the non-retirement expenses. About 36 percent of the respondents think that they would need to take out money from the retirement savings in the future.

Major Solutions

One thing that the baby boomers do to get over the fact that majority of American workers have less than $100,000 retirement benefits savings is to work longer. In reality, about 52 percent of the baby boomers who are cash-strapped have accepted that they plan to work longer, says the PWC survey.

Another solution is to try for debt reduction. About 23 percent of the baby boomers who are planning to delay their retirement have mentioned that debt is a main reason for the delay. About 46 percent of baby boomers have also accepted that they constantly carry a balance on the credit cards they own. Around one-third of those even have faced trouble in making the minimum payments. The baby boomers must reduce the number of debts by not being a victim of the debt trap in which debt takes the power of compounding and turns it against a person to create a situation in which the money owed by a person keeps on growing until that person takes intentional steps to pay it back.

These solutions seem apt for resolving the situation in which majority of American workers have less than $100,000 retirement benefits savings.

Retirees want Younger Generations to Save towards Retirement Benefits Consistently

A study has highlighted that retirees want younger generations to save towards retirement benefits consistently because they failed to do the same. Many of the retirees also think that they were forced to retire earlier than expected. They also admitted to facing several financial issues. Experts believe that there is a need for changing perception on employment, aging, and retirement.

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Study Says Retirees want Younger Generations to Save towards Retirement Benefits Consistently

The study that says retirees want younger generations to save towards retirement benefits consistently was offered by the Transamerica Center for Retirement recently. It was released last month. It found out that the retirement landscape is constantly changing as many workers are planning to work past the traditional retirement age of 65. It is a huge departure from the experiences of those people who are already in retirement. This was highlighted by the Center President, Catherine Collinson.

Why Retirees Stop Working?

The study that highlights retirees want younger generations to save towards retirement benefits consistently has also revealed some reasons on why retirees stop working before they reach 65 years of age. Collinson says that most retirees stopped working before 65 because the reasons were outside their control. So, their financial realities serve as a cautionary tale for employers, workers, and the policymakers.

Retirees who opted for retirement at the median age of 62 shared the reasons for retiring early. The first few were employment related reasons like job loss, organizational changes at the workplace, unhappiness with career or job or getting a retirement incentive or buyout. These reasons were mentioned by 66 percent of respondents. About 37 percent respondents highlighted reasons like ill health or family responsibilities. Only 16 percent of the respondents said that they retired because they had the financial ability to do so. Just 7 percent said that they retired later than planned and out of those 61 percent mentioned the need for more income and benefits.

The Problem

Collinson stated that many retirees envision that they will spend decades in retirement even if with limited means and savings. She added that many retirees rely on social security and for many, the need to pay for long-term care or a major unexpected expense could prove to be financially devastating.

The Retirement Nest

Only 16 percent of the respondents in the study mentioned that they strongly agree that they have built a large enough retirement nest egg. The total household savings in all the retirement accounts among retirees was $131, 000 at the time of the retirement. The annual household income among the retirees is about $32,000.

Financial Priorities

In the survey that exposes retirees want younger generations to save towards retirement benefits consistently, the retirees also mentioned a lot of complicated financial problems. About 42 percent of them think that just covering living expenses is a problem, 37 percent said that paying health care expenses was troublesome while 21 percent admitted paying off mortgages as an issue. About 20 percent also pointed out that continuing to save for retirement was a problem as well.

Collinson says that one of the most important things that were within reach of retirees and pre-retirees is to create a financial plan that identifies opportunities, vulnerabilities, and methods of addressing them.

Lack of Strategy

The study that talks about how retirees want younger generations to save towards retirement benefits consistently also discovered that only 10 percent of retirees and 14 percent of workers who were more than 50 years of age have a written strategy that might include on-going living expenses, government retirement benefits, a budget, health care costs, savings & income needs and many other factors.

Advice for Younger Generations

The study also determined that 76 percent of retirees want younger generations to save towards retirement benefits consistently because they wish they would have done the same. About 53 said that they would have liked to receive more information or advice from the employers on how to achieve the retirement goals. Approximately 68 percent respondents stated that wish they had been more knowledgeable about investing and retirement savings.

Around 48 percent of the respondents said that they had waited too long to bother themselves with investing and saving for retirement. This is probably why the retirees want younger generations to save towards retirement benefits consistently and early on. Around 41 percent also accepted that they should have sought the help of outside experts to manage and monitor their retirement benefits savings.

Expert Opinion

Collinson said that people are living longer as compared to any time in history, but they age at which they stop working is relatively unchanged. Mathematically speaking, the notion that people can work for 40 years to save enough and accumulate sufficient benefits to fund a 30-year retirement will not add up. To solve this equation people need to change the way they think about employment, aging, and retirement. Highly coordinated efforts of employers, nonprofits, policymakers, individuals, family and private sector are needed to solve this equation.

Conclusion:

It seems that the information that retirees want younger generations to save towards retirement benefits consistently is a good one as they have learned from experience and their personal knowledge is quite valuable.

Diminished Capacity Makes Retirement Benefits Planning Harder: Study

A recent survey has highlighted that the biggest concern of the retirees after 10 years into retirement was dementia or diminished capacity. People are concerned about the financial implications of their health and it is being stressed upon that the CPA financial planners should make sure that the financial fears of a person are addressed and retirement benefits planning is done smoothly before this disease takes total control of a person’s mind and leaves the person and his/her family devastated.

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How People are Reacting to the problem of Diminished Capacity and Retirement Benefits Planning

The survey was organized by the American Institute of CPAs and it asked some questions from the CPAs regarding their clients’ attitude towards retirement benefits planning and dementia or diminished capacity. The survey stated that only 18 percent of clients are taking steps to address the problem while 35 percent are still weighing the problem. Half of the CPAs who were interviewed admitted that their clients have shown signs of diminished capacity or dementia in the last year.

The vital survey further revealed that one-third of the respondents feel that their clients have chosen to deal with dementia on a reactionary basis and about 13 percent are ignoring the problem. This makes it difficult for the CPAs to create a solid financial plan for the future years of the retiree.

How CPAs are Helping?

The survey highlighted that the financial planners are playing an active role in dealing with diminished capacity or dementia. About 85 percent are doing it by ensuring that all the health care proxies and powers of attorneys were in place. About 61 percent have made arrangements so that they can make contact with the professionals and relatives of the clients.

About 44 percent of the CPAs have got the authorization to contact the client’s attorney when needed while 35 percent have moved the money to a trust. About 34 percent have also automated the annual required minimum distributions needed by a client from their eligible retirement accounts. Around 18 percent have admitted that they had their clients move into an assisted care facility that was previously discussed with the clients.

Good Going

It seems that a number of CPAs are doing a good job of ensuring that their clients have access to retirement benefits and other facilities even after dementia or diminished capacity becomes a major issue for the clients. To help further, the members of the PFP Executive Committee have even developed a Diminished Mental Capacity Checklist that can assist too.

Americans Saving Longer Towards Retirement Benefits

A new study has revealed that the Americans today are saving for longer years so that they can get retirement benefits for several more years than their predecessors. The study also highlighted the fact that Americans didn’t rely on kids for support in retirement and it also mentioned the ways in which they plan to support themselves financially after retirement. The study also revealed many other interesting facts about retirement.

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>7 Years More to Plan Retirement Benefits

The study was conducted by HSBC and named The Future of Retirement: Generations and Journeys surveyed. The study has found out that that Americans are planning to save longer for retirement. They would be saving for 7 years more than their predecessors. The survey was conducted in 17 nations and the number or respondents were over 18,000. On an average, American people work about 5 years longer than the people of other parts of the world. It is 35 years vs. 30 years.

The Reasons

The main reason for the longer time needed to save towards retirement was that the Americans didn’t want to rely on their children. About 3 percent Americans want to rely on children while at a global level this percentage is 12 percent. The people of Hong Kong and Singapore are more willing to depend on their kids as the percentage of people relying on children in these nations are 41 percent and 34 percent respectively.

Relying on Money Sources

Most of the Americans wish to reply on some cash sources for their retirement income. About 56 percent of Americans are using cash savings to survive in their retirement and 51 percent are depending on social security. About 38 percent depend on stocks, 32 percent rely on mutual funds and about 29 percent depend on the income of their spouse or partner. About 10% Americans are more likely to sell a property as compared to other retirees.

The Regret

Though Americans are saving longer for getting steady retirement benefits, about 44 percent Americans wish that they had started to save for retirement a bit earlier. About 33 percent also admitted that they regret not saving a larger portion of income towards retirement savings. Some Americans still have no savings at all. About 14 percent of working age people has not started to save for retirement. About 3 percent of these people have already crossed the age of 60 years.

New Mexico Joins the Efforts to Provide Retirement Benefits to Private Sector Workers

The lawmakers of New Mexico have initiated the process of understanding how they can provide steady retirement benefits to the private sector workers. Experts believe that low-wage workers in the state have no access to a retirement plan.  When they have a plan they would have better savings.  Some experts also think that only private sector employees do not only need an income in retirement, the general public needs it too so it must be a focus area.

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The Brief Regarding Offering Retirement Benefits to Private Sector Workers

The members of the legislative committee of New Mexico were recently briefed on the efforts to boost automated access to retirement benefits plans by the national experts. The members of the committee are responsible for overseeing state investments and pension.

The Fact

A harsh fact revealed by The AARP Public Policy Institute is that about 64 percent of private sector workers present in New Mexico do not have access to any sort of employer-sponsored retirement plan. It is the highest rate in America. As seven other states are moving to increase access to retirement benefits, it’s high time for New Mexico to do the same.

The Worst Hit

The Director of Consumer Affairs and Financial Security at AARP, Gerri Madrid-Davis recently informed the New Mexico lawmakers that the lower wage workers in the state are least likely to get access to any employer-sponsored savings plan. They don’t even have an access to tools like automatic retirement withdrawals from paychecks which can play a key role in boosting the retirement savings. She also said that workers who have an employer-sponsored retirement plan are 15 times more likely to save for retirement as compared to those who don’t have access to such plans.

Needs of the General Public

George Munoz who serves as the Chairman of the Investments and Pensions Oversight Committee believes that the legislators must cater to the retirement needs of not only employed professionals but the general public as well. If the general public has no source of retirement income, the federal social security system feels immense pressure.

Efforts of Other States

It is pertinent to mention here that five states such as Maryland and Illinois have made it mandatory for numerous small businesses to provide retirement benefits plans that have features like automatic enrollment and allow a person to opt-out anytime.