Conrad Ciccotello, Associate Professor and Director of Graduate Personal Financial Planning Programs, says the changes that have been made - and probably can be made - to fix Social Security are minor. However, there is a bright spot on the horizon. Thanks to the intense focus on the issue in the media, Americans are now taking responsibility for planning for retirement. Still, there is plenty of work to be done. The average American household has saved only $18,750 for retirement. And only 42 percent of Americans have calculated how much they will need to have saved by that time.
“As we move forward, the picture does I think get brighter because people have more time to realize that essentially we are pretty much on our own to fund our future retirement needs and that actually has a lot of advantages - like portable retirement plans. Rather than having to stay somewhere for 20 or 30 years, which is becoming very rare, you can move around and bring your plan with you, which is a big advantage. But the concern about this is that if people have to manage their own retirement, they need to be more concerned about it. This is why there is such a huge push for education and advice through all different sorts of sources – government, media, the education system.”
Savvy, well-educated parents are starting to nudge their children to open up Roth IRA accounts in their teen years, as they have learned that the benefits of starting early are staggering. In fact, if a child saves just $4,000 a year between 14 and 18 years of age - $20,000, total – and leaves that money alone for the next 50 years, that child will have $1 million saved in 50 years. “That is a wonderful opportunity because young people are in the new world and they have time to react to it,” says Ciccotello.
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