Preparing To Combat The Retirement Crisis

By: Kaitlyn Harbick

92 % of Americans surveyed by PBS NewsHour think there’s a retirement crisis.

This past evening, some members of our  Investor Relations club attended a lecture hosted by the University of Oregon School of Business called The Retirement Crisis. The lecture not only proved highly insightful in that a breadth of information regarding saving for retirement was offered, but it also served as a much needed reminder of the crucial importance of being prepared for our post-career lives.

Joshua Rauh, Stanford Graduate School of Business professor of finance, contrasted arguments for and against whether or not we are indeed plagued with the inevitable burden of living in a society in which a healthy retirement fund is not always a given. Rauh dove into the facts backing the current scare by explaining that one reason contributing to the crisis is that the longevity of life expectancy has increased 60 percent since 1955. Put in simpler terms, people are living longer, therefore needing more money saved up by the time they retire. The average retirement age for men is 64, whereas the average for women falls around 62. Although this average retirement age has not seen much of a shift in recent years, we are inevitably living longer.

Rauh explained how 53 percent of individuals are at risk of falling short of the 70 percent replacement rate of wage-indexed average earnings. The good news? The 401k system is indeed seeing improvement. However, Rauh argues that private sector IRA plans, such as payroll deduction IRA, SEP and Simple IRA Plans, are better options to seek out.

The next speaker in attendance was Ted Wheeler, Oregon State Treasurer. Adding to advice given by Rauh, Wheeler offered something that struck us all: People today are more afraid about running out of money for their retirement than they are of their own death.

So, what can we do about this as students? Get educated, absorb any information we can on the topic, and when the time comes to land our first full-time positions, seek out valuable and smart retirement plans that will make us the 8 percent not worried about the retirement crisis.

Photo courtesy of Forbes.com

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