Let’s Look at the Issues
A recent survey by the Employee Benefit Research Institute shows that a financially secure retirement remains a huge concern for many American workers. There should be concern. The same survey shows that 57% of all U.S. working men and women have less than $25,000 saved for retirement. Even worse, 28% of all U.S. working men and women have less that $1,000 saved for retirement. This was the seventh straight year that the percentage of American workers with little or no retirement savings increased.
The study even had bad news about workers who have pension plans. It showed that more than half of all workers (54%) with pension plans are failing to save enough for retirement.
It is not a pretty picture. And workers know it. The same study showed that only 17% of all workers surveyed had any confidence in their ability to save enough for a comfortable retirement. The study also verified the obvious: The disparity between the amount of money workers have saved up and the amount of money they will need for retirement is forcing many workers to stay on the job longer than they wanted.
One of the other statistics that is so alarming is that fewer than half of all American workers have even attempted to calculate how much money they will need in retirement.
With all these discouraging facts, however, there are things that workers can do to improve the chances of a secure retirement. Here are some of them:
Belonging to a union. Because union workers earn higher wages than non-union workers it is easier for union members to put aside some money for retirement. But that’s not the only difference. The percentage of union workers who have pension plans greatly exceeds the percentage of non-union workers who have pension plans. In fact, less than 10% of non-union private sector employees have a pension plan, showing that union membership provides advantages not just for now, but also for the future.
Investing in a 401 (k) plan. Workers who invest in 401 (k) accounts have a tremendous advantage over workers who do not. For starters, the money that workers invest is a 401 (k) account is not taxed as income, either by the federal government or the state. If you think about it, it’s the equivalent of earning a higher wage than someone who does not invest in a 401 (k) plan. In addition, money is allowed to grow free of taxes in 401 (k) accounts, giving savers another advantage over money that is kept in bank savings accounts. One of the other good things about a 401 (k) account is that there are plenty of chances for workers to start one. As an example, there are two enrollment periods a year for members of our Union to start a 401 (k) account. The next enrollment period will take place in June. Watch for additional details in Hotel Voice during the month of May.
Owning a home. There are many of advantages to owning your own home, not the least of which is that it will help provide for a more secure retirement. Also, as we have explained so often, owning your own home can be cheaper than renting a home. That’s because money used to pay rent is never seen again, while money used to pay off a mortgage will indeed be seen again when the home is sold, refinanced, or left to your heirs. In addition, the interest you pay on your home mortgage is tax deductible, meaning that home ownership is also a tax deduction. There’s more. The equity that you build in your home as years go by can be used to buy a second home, to finance your children’s education or to pay for other needs. In addition, home ownership can also be a source of revenue in your retirement years through what’s known as a reverse mortgage program. Under a reverse mortgage program you can use your home to receive monthly payments from a bank. At the same time, however, we strongly urge any members who are considering a reverse mortgage to seek legal representation. There are plenty of reverse mortgage scams going around, especially in senior communities, But if done correctly and used wisely, the ownership of your home can indeed be used as a source of income for retirement.
Use the Union Plus Website. The Union Plus website has a retirement planning center that can really be helpful. While the Employee Benefit Research Institute reports that fewer than half of all American workers have even attempted to calculate how much money that will need in retirement, the Union Plus website’s retirement planning center has a calculator that can help you determine how much money you will need in your golden years. There are lots of other helpful tools to be found at the Union Plus retirement planning center including a retirement road map. You’ll find all this at Unionplus.org
While studies show that a secure retirement is eluding more and more U.S. workers, it doesn’t have to be that way. Use the resources available to you as union members and that secure retirement will be a lot easier to reach!
