PLANSPONSOR - August/September 2021 - 30
FINANCIAL WELLNESS | PARTICIPANTS
Equipped for Anything?
Factor all sources of retirement income into outcome projections
O
utside of the employer-sponsored
retirement plan, a retiree
will likely have other sources
of income. Ninety-seven percent of
Americans ages 60 through 89 either
receive Social Security or will receive
it, according to the Social Security
Administration (SSA).
Because the retirement plan
industry has moved from being mostly
defined benefit (DB) based to mostly
defined contribution (DC) based, Social
Security will be the majority of workers'
only source of guaranteed retirement
income, a paper from the Center on
Budget and Policy Priorities says.
In addition, Medicare provides
health coverage to more than 49
million Americans, according to the
AARP Public Policy Institute. However,
multiple studies have found that people
think Medicare pays more for long-term
care than it actually does.
Therefore, pre-retirees should
understand how to factor Social Security
and Medicare, plus long-term care
expenses, into their retirement planning.
And plan sponsors may want to consider
educating these employees about how the
programs work.
Each is critical to how one plans for
spending in retirement and to reducing
the likelihood of running out of money
prematurely, says Matthew Wunder,
a Northwestern Mutual financial adviser
and the founder and CEO of Wunder
Financial, a Northwestern Mutual
company, in Westport, Connecticut.
30 PLANSPONSOR.COM August - September 2021 Art by Jam Dong
Social Security
According to the SSA website, Social
Security will replace about 40% of an
employee's pre-retirement income after
retirement, with expectations that this
will be lower for people in the upper
income brackets and higher for people
with low incomes. " You'll need to supplement
your benefits with a pension,
savings or investments, " the website says.
The administration notes that most
financial advisers say a person will need
about 70% of pre-retirement earnings to
comfortably maintain his pre-retirement
standard of living. So, 40% is more than
half of what the average person will need.
In its annual Social Security
Consumer Survey, Nationwide found
most Americans have gaps in their
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Table of Contents for the Digital Edition of PLANSPONSOR - August/September 2021
To Ensure All Are Well
2021 PLANSPONSOR National Conference
Equipped for Anything?
The Security of Savings
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PLANSPONSOR - August/September 2021 - To Ensure All Are Well
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PLANSPONSOR - August/September 2021 - 2021 PLANSPONSOR National Conference
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PLANSPONSOR - August/September 2021 - Equipped for Anything?
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PLANSPONSOR - August/September 2021 - Take a Load Off
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