Tag Archives: retirement

Could You Retire on $159 Million?

I don’t know if I could. I’d have to do some belt-tightening….

Seriously, McKesson’s CEO is due a pension of $159 million. This is on top of an average $50 million annual compensation plan. Do you think most of his employees will retire with such a generous package?

I doubt it.

According to the Center for Retirement Research at Boston College, only 42% of private-sector workers are covered by employer-provided retirement plans, and a typical household headed by a person aged 55 to 64 has total retirement assets of about $170,000, not counting Social Security.

Do you think employees seeing such a disparity in the executives’ financial security and their financial security can have an impact on their engagement at work? Their concern for the company? They’re working hard, yet most of the spoils are going to a few, the fat cats. They see this and wonder why they get a measly 3% annual increase, if that.

If your firm has such a disparity in retirement packages, you may want to take a look at it closely. Why is it there? Can you change it? How much value are the executives bringing? Think objectively – not based on what they tell you. You may find that leveling the field a bit can reap enormous benefits in the workforce.

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More People Do Not Plan On Retiring

American workers toiled under the assumption that after years of hard work they would be able to retire to a period of leisure towards the end of their lives. However, economic realities have reversed these activities for many older people. People are living longer and an increasing number of people are getting older. Government support programs meant to help the elderly are being accessed like never before. Retirees have seen retirement funds depleted with the recent recession. Many have had to return to work and some say they will never retire. 

The Non Retirees

A recent survey by the Employee Benefit Research Institute shows more seniors are working longer and may not leave the workforce due to the recession. In 2006 11.2 percent of workers expected to retire at age 70 but this increased to 14.8 percent in 2010. 1,7 percent planned to retire at 80 but increased to 5.2 percent in 2010. In 2008 22.4 percent of workers over age 50 stated they planned on never retiring but this did decrease to 16.3 percent in 2010.

Social Security Isn’t Enough

The average expected benefit for a retiree in January 2012 is  $1,229 which works out to $14,748 a year or equivalent to $7.37 an hour for a typical 2,000-hour-a-year job. Although meant as a supplemental income program, more seniors have relied on it due to problems with retirement programs. In addition there are fears that with more people receiving benefits, there will be problems with funding the program in the future.

More Competition

With more seniors returning to and staying in the workforce, there is more people competing for jobs. Positions in retail stores that traditionally go to younger workers are now being taken by older workers. These include laid off individuals as well as retirees. Older people are working in various jobs ranging from  part-time, seasonal, and temporary.

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Economic Downturn Has Little Effect on Employees’ Savings Plans

As shown in the results of a 2011 CareerBuilder Survey, employees are still investing in savings and/or 401k plans. For employers and HR professionals, this puts more emphasis on maintaining retirement saving programs that they may consider cutting – especially if they assume that employees are saving less in difficult financial times.    

The CareerBuilder survey included 3,900 employees, and it found that nearly 80% said they haven’t changed the amount they put into 401K accounts or personal savings in the last year.  

“Even though fewer workers are living paycheck to paycheck and are saving more, workers’ wallets are still feeling the strain of the past few years,” said Rosemary Haefner, vice president of human resources for CareerBuilder, in a statement.  

“As the economy gradually rebounds and strengthens, workers are gaining confidence. We’re seeing this already as more are investing in their futures and preparing for challenges down the road.”  

Read the IFA Web News article  

Image: kongsky / FreeDigitalPhotos.net

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