Monday , 10 December 2018


Are You One of the Many Who Does Not Understand the Key Concepts Of Retirement

…Most people globally don’t really understand some of the central tenants to global monetary policy, nor do they understand some of the key concepts about retirement. This was revealed in a recent Bloomberg article published today, which states that “Many of the participants failed the quiz, with big potential consequences for their future security.”

The original article has been edited here for length (…) and clarity ([ ]). For the latest – and most informative – financial articles sign up (in the top right corner) for your FREE tri-weekly Market Intelligence Report newsletter (see sample here)

The first alarming problem is that the average every day investor doesn’t seem to understand the difference between a stock and a mutual fund. When asked which of the two were the riskier financial instrument, only 45% of people around the world knew the answer – that’s less than half. 

Also, it is a little to no surprise that the average middle-class worker doesn’t seem to understand how inflation works or how it affects their ability to purchase goods. This may explain Central Banks’ obsession with manipulating it and using it as a tool to further their spending agendas. The article continued: More than 20 percent of workers didn’t grasp how higher inflation hurts their buying power. Given that declining health was the most-cited retirement worry, at 49 percent, and healthcare is an area (in the U.S., especially) with high cost-inflation, well, that makes the subject something older folks should have down cold.

Despite the lack of understanding, making fiscal sense remains a major concern for people heading toward retirement. The survey also queried participants regarding what their biggest concerns were as they approached retirement. “Running out of money” came in second, only to “declining physical health”. 

Despite not understanding the core principles of the government’s monetary policy, participants in the survey seemed to be sure that the government benefits offered for retirement were crucial to a comfortable retirement…

  • The survey asked workers—about 1,000 per country—what global trends would affect their retirement plans. “Reduction in government retirement benefits” was the most popular answer worldwide, chosen by 38% globally; in America, it was 26%. The countries most worried about cuts to government benefits? Brazil and Hungary, at about 53%.

The reality of trends that will actually impact retirees seemed to go unnoticed, however, according to the survey. Across the board workers didn’t seem to recognize the huge impact that basic changes in the labor force, technology and the climate will probably have on their retirement plans…

Survey participants also seemed to be a little detached from when they would actually stop working, on average. The survey found that:

  • 39% of people who wanted to work to 65 had to retire early of which
  • 30% stopped working earlier than they had planned for reasons of ill health, and 26% due to unemployment/job loss.

…The survey asked about “aging friendly modifications or devices” people envisioned having in their homes. 35%of workers in India, 34% of workers in Turkey and 18% in the U.S. figured aging could include video monitoring devices. Then there are the robots, which 20% of Chinese workers see coming in retirement, compared with 6% of American workers.

…The real retirement crisis, however, is that elderly people are simply broke. 6,400,000 million American seniors are living at poverty level, struggling to meet fundamental needs such as rent and food.

  • A study released by GoBankingRates reveals that…42% of Americans are facing their golden years with less than $10,000 in savings (In fact, only 33% Americans over the age of 50 have $10,000 in savings). A lack of savings and planning has reduced what should be an enjoyable time in seniors’ lives to a period of stress and worries for many.
  • The Bureau of Labor Statistics indicates that Americans 65 years of age and older may spend up to $46,000 annually on healthcare. This is not good news for those with only $10,000 on which to fall back on.

For adults over 50, this should be a call to act now, while there is still time. Retirement planning needs to become a priority, as there is little time to waste. Pensions are becoming rarer, and Social Security is becoming less secure than it used to be. Many health needs of seniors are not covered by Medicare. Some experts believe the Social Security system will be depleted by 2030. Adults over the age of 50 need to consider making contributions into 401(k) accounts or similar retirement plans.

  • Social Security was never intended to be the sole income of retiring seniors. It was meant to supplement approximately only 40% of post-retirement spending. Social Security was supposed to enhance seniors’ lives, not support it entirely. However, according to Investopedia.com,
    • 43% of unmarried seniors rely on Social Security to cover 90% of their basic needs.
    • Almost 25% of married couples depend on Social Security to meet most of their expenses.

Some seniors struggling with poverty are able to receive supplemental income (“SPM”), such as food stamps for a bit of additional help. The need is especially high for seniors who are women, African Americans, and Hispanics, and those with ongoing health issues.

Conclusion

if you are confused as to why more people are not appalled about the state of global economic policy, maybe it’s because they simply don’t understand it. It is only those that know how policy works behind the scenes and can see through the “tricks of the trade” that find themselves speaking out against the way global economic policy is managed.

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