Planning for your retirement is an important step you must take. Your goal in planning is to maximize savings for when you retire, covering the costs you will face when you’re no longer earning a regular paycheck. There are many tools and strategies available to help you secure a stable retirement. Avoiding risks and accomplishing your retirement savings goals require a solid framework, however. Rules change and trends come and go. A retirement planning specialist can help you achieve the goals you set, and they are familiar with emerging trends that can help maximize your savings. Here are some predictions for retirement planning strategies in 2017.
You Can Become a Millionaire with Your 2017 Investments
Yes, it’s true. Historical investment return rates make it possible for young earners to save enough money in 2017 to retire as millionaires. The underlying reason for this is that the rules have changed for contributions you can make to retirement plans.
Under 2017 rules, a person under the age of 50 can contribute up to $5,500 to an IRA, either a traditional IRA or a Roth IRA. $18,000 can be contributed to an employer-sponsored retirement plan like a 401(k). In one year, that is a maximum retirement contribution of $23,500, all in tax-advantaged retirement products!
Think about this: if you are just out of college and have a good job, you may be able to retire as a millionaire. $23,500 is a lot of money for new earners to put away for retirement, but by doing so you can dramatically increase the odds in your favor. One year of contributions in 2017, or the full $23,500, may grow through compounding interest rates over time. Historically, this interest rate has hovered around 9% annually. In 44 years, if that return rate remains stable, you could sock away $1.04 million for your retirement.
Social Security Reform Won’t Happen in 2017
Despite campaign promises over the past several years, the ailing Social Security program still faces significant problems. Patches applied to the program have not succeeded in creating solid reforms. Preserving Social Security through aggressive economic growth rather than by direct spending efforts or tax law changes were part of recent campaign promises. Bills proposed in Congress, however, have little chance of actually passing.
Any proposed changes to Social Security are considered “political dynamite”. Critics suggest that these changes are economically destructive or could dangerously impact financial security for the elderly. The result is that these proposed changes are weak, at best, and even the best ones tend to fall on deaf ears in Congressional meetings. Real Social Security reform will require the courage to do something dramatic, so most investment professionals see this as a lost cause in 2017.
The result, unfortunately, is that under current models, Social Security’s trust funds will run out of funding sometime around 2034. This will cut the benefits of all recipients by as much as 20%, causing those who rely on Social Security to struggle. It is best for young retirement investors to diversify in IRAs, mutual funds, and the stock market to cover any potential shortfalls in Social Security programs.
Many Retirees Will Get Jobs to Help Make Ends Meet
The last thing most of us want to do when we retire is to have to start working again. Unfortunately, this is a growing reality for many retired Americans. Recent financial surveys have suggested that up to 43% of all retirement-eligible baby boomers may not be able to meet expenses once they stop working, forcing many to seek ways of supplementing retirement income. A bold prediction for 2017 is that more and more retirees won’t be able to enjoy a relaxed retirement; rather, they’ll be out looking for jobs.
Relying on the security blanket of Social Security or other government-funded programs like Medicare, or even employer-based retirement plans, no longer makes financial sense. Most retirement planning professionals are urging their clients to aggressively save money by contributing the maximum to retirement plans like IRAs and 401(k)s while they are still working. Overcoming potential future shortfalls in Social Security by funding these retirement plans is a smart way to hedge bets. It is possible – no, it is CRITICAL – to keep retirement plans on track by trusting the advice and guidance of retirement planning specialists.