Retirement planning continues to change as younger individual must face new challenges. Social security was enacted into law in 1935 and provided for benefits beginning at age 65. At that time life expectancy was 61 so it was anticipated to pay beneficiaries for only a short period of time. In addition, there were approximately 37 workers for every 1 retiree. Currently that ratio has declined to 3 to 1. To compound the problem many more employers offered defined benefit pension plans that paid a portion of the retires earnings at retirement. Self-funded retirement plans became available with the introduction of annuities, IRAs, 401(k)s, and Roth IRAs. Each has its own advantages and disadvantage.
Questions to consider include
- What will social security look like when I am eligible?
- What will income tax rates be?
- Is there a more effective way to prepare for retirement?
- How much market risk could I tolerate?
- Is there a plan that would allow access to a portion my retirement account, if necessary, without incurring substantial tax penalties?
- What other risks could derail my plans?