If you said yes, think again! For many decades, it was thought that a pension from a large Fortune 500 company would guarantee a comfortable retirement. With the bankruptcy of General Motors and Chrysler, major airlines such as: United, Delta, Northwest, US Airways, big banks such as: Lehman Brothers, Bear Stearns, Washington Mutual and more, the bankruptcy of major retail chains like K-Mart, Circuit City and many more companies, everyone has learned that having a pension from a big company is no guarantee that you will have a comfortable retirement.
The purpose of this weeks blog is to educate you on what has happened and what is happening now with corporate and government pensions. All of the information contained here is completely factual. Unfortunately, many retirees have suffered losses and have had to reduce their standards of living in retirement because they were not fully informed of these important changes that are now taking place. Through education, we hope to be able to assist you in avoiding any such losses. Some long-term employees and executives of the big companies mentioned above, and of many other companies, have seen their pension income significantly reduced. In some cases, they are receiving only 10 cents or 20 cents of every dollar of income that was promised to them. A record-breaking number of failed pension programs have been turned over to the government- run Pension Benefit Guarantee Corporation (PBGC). As a government entity, the PBGC does not have to pay all the benefits promised to retirees in the original pension plan.
Here are some facts of which few retirees and pre-retirees are aware. If you are age 60, your maximum monthly pension that the PBGC pays would only be $2,925, even if you were “promised” a much larger pension. Many Americans whose pension plans have gotten into trouble have been surprised by how little they receive from the Pension Benefit Guarantee Corporation. Countless numbers of retirees who thought they had a “guaranteed” retirement of a certain number of dollars per month have had to either radically downsize their lifestyles or go back to work when the PBGC took over their pension plan and reduced benefits. Employees of small and mid-sized companies have fared even worse than employees of large companies. This is because many small companies do not have any type of pension plan or 401(k) program due to the cost. Employees who do have some type of retirement program lost hundreds of billions of dollars in the stock market crashes of 2000 to 2002 and in the stock market meltdown of 2008. What will happen with the volatility we are facing now in 2011 that may follow into 2012?
If a person has any type of retirement program at all today, it is most likely to be a 401(K). As you know, 401(k) plans are totally exposed to stock market volatility and risk You truly have no guarantee of a safe, secure retirement if you have a 401(k) plan. Most Americans do not have much money saved for retirement and this is one of the reasons they feel so much anxiety and fear when they think of their retirement. Of the money that is saved for retirement, much of it is exposed to stock market risk.
If retirement security is important to you, then it’s time to take action. Our goal is to help as many Californians as possible enjoy total retirement security through education and guidance.
Warmest Personal Regards,