The Benefits Of Contribution Plans

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In a society bombarded with a “have your cake and eat it too” attitude, there may be a multitude of reasons why the numbers needed for retirement are simply not adding up. For some older adults it may be due to a risky investment, while others may have bought in to the too good to be true credit card agreement. Some companies are even taking advantage of this unfortunate fact and creating buyout packages to prevent prolonged employees past an appropriate retirement age. No matter what the variables seem to be, the problem at hand seems to be a growing trend that a large number of adults are coming face-to-face with as they reach- or rather, don’t reach retirement. As a result, their children are learning valuable lessons about financial planning, and in some cases, pausing their own progression in order to become providers for their own, once known as, providers. Now that the problem is recognized, what events have created such a drastic change in the way of retirement? The older generation may be familiar with receiving pensions, or a defined benefit plan, after retirement. Slowly but surely, however, pensions are becoming a thing of the past and defined contribution plans, better known as 401k plans, have taken over. At first the 401k was known to help give increased benefits toward retirement, but over time, employers have scaled back on the benefits of the plan and the employee turnover rate has drastically increased (Miller). The switch to a defined contribution plan may explain the decrease in loyalty at the workplace, but as far as retirement finances it is not solely at fault. The introduction to credit cards, risky investments and fraud have victimized many Americans in terms of savings. In the article, one of the major problems mentioned was buying things beyond realistic financial income. Credit card debt is currently a massive problem to many Americans. As the cost of living continues to increase and mortgages continue to extend beyond retirement, credit card freedom is an appealing way to have the things that you could otherwise not be able to afford. However, this form of instant gratification has led many people to never pull themselves out of debt let alone begin saving for the future. Perhaps the theory of “safety over risk” in terms of investments, including credit cards, provided a better ending in the long run in comparison to the “no return without risk” outlook. Still, with all of these variables contributing to the problem of out of reach retirement, the most intriguing part of the article was that
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