Financial planning goes hand in hand with retirement planning and are important assets that one should or must consider investing in as they proceed with their lives (Wang, 2006). It is imperative for one to secure their future and make their money work for them particularly at a time when they are not in a position to work hence have a constant source of income like in retirement (Updegrave, 2006). Though research shows that more than 55 percent of Americans consider financial planning to be more crucial now than it was one year ago, not all of them are as focused as they should be in planning for their retirement (Wang, 2006). Most Americans take long to realize that retirement planning goes hand in hand with income planning and only realize this late in life after they have already retired and are not able to finance their retirement. The ongoing crisis has also had an impact on retirement causing several people to postpone their retirement by up to 4.2 years. Cases of people coming out of retirement to work again so as to sustain themselves have also increased (Cooper, 1990). Research attributes these trends to inadequate financial planning for retirement and other factors that make retirees run out of money and go back to work in search of income to sustain them.
According to Lewis (1988), financial planning for retirement is now more essential than ever. The article argues that Social Security is no longer a reliable plan as there are fears of it being completely eliminated due to the steadily increasing number of people over the age of 65. This is based on the fact that the number of baby boomers who currently are in their retirement years keeps increasing placing so much pressure on Social Security such that it might have to be pared in future in order to cater for the large number of retirees. The number of workers sustaining Social Security through payroll taxes has also been declining steadily creating financial problems for the program. Bell, Fields, Murphy (1988), explain that the amount given by Social Security might not be enough to sustain one through their retirement hence the need for private investments as the main source of retirement security.
Longevity of Americans has increased making financial planning for retirement more essential (Lewis, 1988). Though most, if not all people want to live a long life, they also want to ensure that their longevity is sustained by a comfortable financial security. As life expectancy of Americans has lengthened due to medicine and sanitation advancements, it has had surprising impact on retirement plans. Increase in longevity increases chances of one prematurely depleting their retirement assets. This is a matter of great concern as it implies that future retirees are likely to run out of money (outlive the money set aside for retirement) (Lewis, 1988).
Inflation, where prices tend to increase over time is another reason as to why future retirees might run out of money if they do not adequately plan for their retirement financially (Cooper, 1990). The inflation rate in the United States has been fairly constant at about 4 percent for over 50 years which ended in 2006. If this rate is maintained or increases as it has due to the ongoing financial crisis, the value of the dollar will be less than 45 cents in the next 20 years. The problem is there is no income increase corresponding to the inflation rate. For retirees, inflation affects their retirement planning by increasing the future prices of goods and services (Cooper, 1990). This is likely to prematurely deplete retirement assets causing retirees to be without money in future particularly since their life expectancy is also increasing. The value of asserts that have been set aside to finance their living is also likely to erode particularly if earning from these assets is less than the inflation rate.
Threats to a financially stable retirement have to be thoroughly evaluated by retirees. These threats include the potential of retirees outliving their retirement assets due to increased longevity and the detrimental impact of inflation on these assets and future income (Businessweek, 2007). Demographic trends are also likely to put pressure on programs that are run by the government including Social Security and health programs such as Medicare which assist retirees in balancing their budgets. It is therefore imperative for them to have personal investments as additional sources of future income. A good sound retirement plan involves income planning and should address particular risks such as rising cost of health care (long term care), longevity, the uncertainty surrounding Social Security and excessive withdrawal rates as these are the risks that can result to premature depletion of retirement assets consequently increasing the likelihood of retirees running out of money (Businessweek, 2007).
Proposed Methodology
Data Collection
Based on the aim of the researcher will carry out a qualitative explanatory study. In this study, a cross sectional survey will be conducted. As a qualitative study, semi-structured interviews and questionnaires will be used to collect (King 2004). These will be administered face to face. The researcher will use both closed and open ended questionnaires. All responses will be recorded and transcriptions made.
Likert 5-point scale system will be used to categorize responses given by employees to the closed-ended questions. This tool employs the use of weights 1,2,3,4, and 5 which denote strongly agree, agree, not sure, disagree, and strongly disagree. Respondents will be required to respond by indicating how strongly they agree or disagree with the asked questionsstatements.
Sampling
Random sampling will be used to select subjects to be used in the study. The study will use responses collected from the following groups of people because of their relevance to the research question retired households, not retired households and financial services professionals.
3.3 Data Analysis
Thematic analysis will be employed in the analysis of data collected using the semi-structured interviews and open ended questions. Thematic analysis employs line by line analysis of the descriptions enabling the researcher to derive rich in-depth meaning from the collected responses. Line by line analysis also enables the researcher to identify similarities in the responses collected from different respondents. The Thematic analysis tool analyses the data by categorizing the descriptions of the responses in accordance with the emerging themes. This allows the researcher to establish matching patterns in the collected responses making it possible for the qualitative data to be quantified (Saunders, Lewis, Thornhill, 2007). SPSS, a computer based program that analyzes data and presents ion form of either charts, graphs, or polygons will be used to analyze the data collected using closed ended questions and categorized by the Likert tool.
3.4 Validation
To avoid validity issues that are typical of qualitative studies, the researcher intends to use multiple perspectives to validate the findings of the study. The researcher chose to use multiple perspectives as there is no triangulation for this particular case. Multiple perspectives is one of the strategies allowed for qualitative studies particularly since these studies lack triangulation (Saunders, Lewis, Thornhill, 2007). In the study, the researcher will use perspectives of the respondents from whom the data was collected from so that they can give their opinion based on their experiences. The opinion of researcher who have conducted prior researcher on similar topics will also be sought. The researcher with also compare the findings of these researcher with those of the study to identify variations and similarities and where possible offer explanations.
Introductory Chapter
According to research, the retirement years which are perceived as ones golden years have started to lose their gleam for many people. Most people are not able to enjoy their retirement as they should because of financial reasons. Research shows that many retirees are outliving their retirement funds and being forced to look for work again just so that they can sustain themselves. This trend is attributed to a myriad of reasons including inadequate personal savings, increasing inflation rates, rapidly increasing longevity as well as the uncertainty surrounding Social Security. The not retired, households seem not to have learnt from the former retirees mistakes and are committing the same mistakes. This has raised concerns over the quality of post retirement life both fort current and the future retirees in the United States. Todays global atmosphere is characterized by many uncertainties. The on going global financialeconomic crisis is a demonstration of this uncertainty. Since most people had not prepared for future uncertainties, the consequences have had detrimental effects on the financial status of many people forcing some to personal bankruptcy. The effect of the crisis on retirees and in particularly those who had not adequately planned financially is disturbing and calls for a solution so that future retirees do not have to undergo the same. Retirement is a stage where everyone wishes to have the security as well as financial comfort so that they do not have to worry about not having enough money to sustain them.
Financial planning for retirement also is important at this stage of life when most people wish to have an effective plan that can endure the toughest times. It is in retirement that people have the most needs and need to be independent financially so that they are not a burden to others. In retirement, most people are old and can no longer work for wages. This is also the time when most people need quality health care as their prevalence to diseases increase. Retirement is also a stage when one needs to do all the things they have wished to do but never had the time because they were working. One also needs to maintain their pre-retirement living standards and if possible improve their lifestyle. All this should be possible without one having to worry about money. Current reports however show that most people are not able to do the mentioned things even though that is their desire because of lack of finances in retirement. Worse is the fact that retirement assets get depleted prematurely and retirees being forced to look for work or be dependent on their relatives. These problems call for understanding of the importance of financial planning for retirement and why retirees run out of money prematurely. It is on these needs that this study is based on. This paper seeks to spell out the importance of financial planning for retirement.
This paper examines the role private investments play in providing retirement security for current as well as future retirees. The article investigates the extent to which various income groups of retired households as well as those who are yet to retire have invested in savings accounts, stocks, private pensions, money market funds, individual retirement accounts and tax exempt securities. The study focuses on the ability of retirees to supplement pension benefits with additional savings. The article argues that pension coverage is lower for future retirees than it is for current ones particularly for the high income earners. It concludes that pensions and private investments are important in providing retirement security to high income earners who need to supplement Social Security benefit which favors low income household more. The paper found that financial planning for retirement through private saving is very important particularly for high income households.
In this article, the author evaluates the five risks to retirement income which must be thoroughly evaluated when planning financially for retirement. The article identifies the potential of one outliving their assets due to increased longevity, threat posed by rising leaving costs, excessive withdrawal rates, rising cost of health care and increasing inflation as the major challenges most retirees face and which might result to them running out of money to sustain themselves in retirement if they are not appropriately addressed through sound financial planning for retirement.
This article is important as it emphasizes on the need for Americans to individually plan for their retirement and stop relying on governmental run programs such as Social Security. The article argues that Social Security only replaces 30 percent of ones salary making it impossible for them to maintain the same lifestyle they had before retirement. one has to have other sources of income to provide the rest of the needed money. This article encourages employees to plan for their retirement as early as is possible and make personal investments so as to safeguard their future. The author argues that those who rely on Social Security alone are likely to run out of money in their retirement.
This article is based on a survey that sought to establish the retirement planning objectives of financial planners and the challenges faced by their clients and by the planners in serving their clients. In spite of the differences in the nature of the financial services as well as practices of the professional planners, the study found a myriad of similar as well as different planning objectives and challenges. The need to be financially secure in retirement was found to be the most important and similar in all the retirement planning objectives studied. Other relevant objectives identified include maintaining self-sufficiency, improving ones lifestyle in retirement and maintaining the pre-retirement standard of living. Amongst the issues identified are accumulations issues one of which is preparing for the effect of postretirement inflation on ones retirement money. The paper is relevant to our study as it explains one of the reasons as to why future retirees could run out of money, and why retirement planning should concern income planning which are some of this studys objectives.
This book was used because it explains the recommended methods for qualitative studies and justifies why they should be used. This book particularly explains why semi-structured interviews are the most appropriate methods to use when collecting qualitative data. It also explains how to use this method so as to get rich in-depth data which is the main focus of qualitative studies. Other methods described are sampling and data analysis techniques. This book helped the researcher to determine the best method to apply in collection of data for this study.
This paper explains the importance of a financial planning program in preparing employees for retirement. The paper discusses why retirement planning is more essential now than any other time. It explains the importance of this planning to HR departments as well as employees. It found that employees are able to decide whether they have saved enough and can voluntarily leave the organization through early retirement which helps ease and reduce cases of involuntary layoffs. This article also gives six reasons as to why retirement financing is important today than it was before. Amongst the reasons given are increasing inflation, increasing longevity, possible cut back on Social Security, decreasing retirement age and possible inability to fund ones retirement and maintain the same lifestyle after retirement. It explains what financial planning (organizational) entails, the role of the Human Resource in this process, costs of financial planning for an organization, importance of employee seminars, one-on-one counseling as well as of giving a benefits summary to employees. The article goes on to explain what individual financial plans entail, how they are prepared, what they contain, their implementation, periodic review, support as well as evaluation by the service provider.
This book describes the various research methods available and what they entail. It explains what surveys are, the types, when to use them, their advantages as well as disadvantages. The book also explains the methods used to collect data in various types of researches, their advantages and disadvantages. Methods of analyzing particularly qualitative data are also described so that one can understand the best method to apply to their specific case. Methods of validation as well as their applicability are also discussed. This book is important as it enabled the researcher to identify the analysis and validation techniques to use for the study.
The article reports results of a continuing study on health and retirement by the University of Michigans Institute for Social Research in which it reveals that increased longevity is causing depletion of retirement assets and might leave those did not adequately plan financially for retirement by considering the longevity risk without money.
This paper is centered on retirement planning to come up with steady income in addition to Social Security that will fund a lengthy retirement. The article discusses three strategies to doing this. They include one taking the responsibility to handle and manage their own money, buying lifelong promises (an annuity, particularly an immediate one), and combining the approach of managing ones own retirement assets and that one of putting in under insurers. Combining the two is advantageous as it enables one to save and earn interest through the money invested with insurers and at the same time have money to take care of unexpected expenses using some of the amount under their control. This article also explains how one can build an income plan and the importance of doing so. It focuses on financial planning for retirement that will enable retirees to not to run out of money in spite of increased longevity or inflation rate.
In this article, the author focuses on the results of a behavioral financial study into the reasons as to why some people succeed in saving for their retirement while others fail. This article is important to our study as it emphasis on the need for people to take personal charge and bear the responsibility of funding their retirement (future) through proper financial planning for retirement. According to the article, success depends on how one handles the inclination to under save as well as to procrastinate. The author argues that saving and investing success requires one to overcome their worst inclinations. Amongst the findings of this study is that those who plan prosper. Planning has been described to involve calculating and estimating how much is needed to fund retirement years, setting the target and working towards achieving it. The article also emphasizes on the need for one to consult and attend seminars so as to gain knowledge on how to go about planning for retirement. This article basically explains what is crucial for successful financial planning for retirement.
According to Lewis (1988), financial planning for retirement is now more essential than ever. The article argues that Social Security is no longer a reliable plan as there are fears of it being completely eliminated due to the steadily increasing number of people over the age of 65. This is based on the fact that the number of baby boomers who currently are in their retirement years keeps increasing placing so much pressure on Social Security such that it might have to be pared in future in order to cater for the large number of retirees. The number of workers sustaining Social Security through payroll taxes has also been declining steadily creating financial problems for the program. Bell, Fields, Murphy (1988), explain that the amount given by Social Security might not be enough to sustain one through their retirement hence the need for private investments as the main source of retirement security.
Longevity of Americans has increased making financial planning for retirement more essential (Lewis, 1988). Though most, if not all people want to live a long life, they also want to ensure that their longevity is sustained by a comfortable financial security. As life expectancy of Americans has lengthened due to medicine and sanitation advancements, it has had surprising impact on retirement plans. Increase in longevity increases chances of one prematurely depleting their retirement assets. This is a matter of great concern as it implies that future retirees are likely to run out of money (outlive the money set aside for retirement) (Lewis, 1988).
Inflation, where prices tend to increase over time is another reason as to why future retirees might run out of money if they do not adequately plan for their retirement financially (Cooper, 1990). The inflation rate in the United States has been fairly constant at about 4 percent for over 50 years which ended in 2006. If this rate is maintained or increases as it has due to the ongoing financial crisis, the value of the dollar will be less than 45 cents in the next 20 years. The problem is there is no income increase corresponding to the inflation rate. For retirees, inflation affects their retirement planning by increasing the future prices of goods and services (Cooper, 1990). This is likely to prematurely deplete retirement assets causing retirees to be without money in future particularly since their life expectancy is also increasing. The value of asserts that have been set aside to finance their living is also likely to erode particularly if earning from these assets is less than the inflation rate.
Threats to a financially stable retirement have to be thoroughly evaluated by retirees. These threats include the potential of retirees outliving their retirement assets due to increased longevity and the detrimental impact of inflation on these assets and future income (Businessweek, 2007). Demographic trends are also likely to put pressure on programs that are run by the government including Social Security and health programs such as Medicare which assist retirees in balancing their budgets. It is therefore imperative for them to have personal investments as additional sources of future income. A good sound retirement plan involves income planning and should address particular risks such as rising cost of health care (long term care), longevity, the uncertainty surrounding Social Security and excessive withdrawal rates as these are the risks that can result to premature depletion of retirement assets consequently increasing the likelihood of retirees running out of money (Businessweek, 2007).
Proposed Methodology
Data Collection
Based on the aim of the researcher will carry out a qualitative explanatory study. In this study, a cross sectional survey will be conducted. As a qualitative study, semi-structured interviews and questionnaires will be used to collect (King 2004). These will be administered face to face. The researcher will use both closed and open ended questionnaires. All responses will be recorded and transcriptions made.
Likert 5-point scale system will be used to categorize responses given by employees to the closed-ended questions. This tool employs the use of weights 1,2,3,4, and 5 which denote strongly agree, agree, not sure, disagree, and strongly disagree. Respondents will be required to respond by indicating how strongly they agree or disagree with the asked questionsstatements.
Sampling
Random sampling will be used to select subjects to be used in the study. The study will use responses collected from the following groups of people because of their relevance to the research question retired households, not retired households and financial services professionals.
3.3 Data Analysis
Thematic analysis will be employed in the analysis of data collected using the semi-structured interviews and open ended questions. Thematic analysis employs line by line analysis of the descriptions enabling the researcher to derive rich in-depth meaning from the collected responses. Line by line analysis also enables the researcher to identify similarities in the responses collected from different respondents. The Thematic analysis tool analyses the data by categorizing the descriptions of the responses in accordance with the emerging themes. This allows the researcher to establish matching patterns in the collected responses making it possible for the qualitative data to be quantified (Saunders, Lewis, Thornhill, 2007). SPSS, a computer based program that analyzes data and presents ion form of either charts, graphs, or polygons will be used to analyze the data collected using closed ended questions and categorized by the Likert tool.
3.4 Validation
To avoid validity issues that are typical of qualitative studies, the researcher intends to use multiple perspectives to validate the findings of the study. The researcher chose to use multiple perspectives as there is no triangulation for this particular case. Multiple perspectives is one of the strategies allowed for qualitative studies particularly since these studies lack triangulation (Saunders, Lewis, Thornhill, 2007). In the study, the researcher will use perspectives of the respondents from whom the data was collected from so that they can give their opinion based on their experiences. The opinion of researcher who have conducted prior researcher on similar topics will also be sought. The researcher with also compare the findings of these researcher with those of the study to identify variations and similarities and where possible offer explanations.
Introductory Chapter
According to research, the retirement years which are perceived as ones golden years have started to lose their gleam for many people. Most people are not able to enjoy their retirement as they should because of financial reasons. Research shows that many retirees are outliving their retirement funds and being forced to look for work again just so that they can sustain themselves. This trend is attributed to a myriad of reasons including inadequate personal savings, increasing inflation rates, rapidly increasing longevity as well as the uncertainty surrounding Social Security. The not retired, households seem not to have learnt from the former retirees mistakes and are committing the same mistakes. This has raised concerns over the quality of post retirement life both fort current and the future retirees in the United States. Todays global atmosphere is characterized by many uncertainties. The on going global financialeconomic crisis is a demonstration of this uncertainty. Since most people had not prepared for future uncertainties, the consequences have had detrimental effects on the financial status of many people forcing some to personal bankruptcy. The effect of the crisis on retirees and in particularly those who had not adequately planned financially is disturbing and calls for a solution so that future retirees do not have to undergo the same. Retirement is a stage where everyone wishes to have the security as well as financial comfort so that they do not have to worry about not having enough money to sustain them.
Financial planning for retirement also is important at this stage of life when most people wish to have an effective plan that can endure the toughest times. It is in retirement that people have the most needs and need to be independent financially so that they are not a burden to others. In retirement, most people are old and can no longer work for wages. This is also the time when most people need quality health care as their prevalence to diseases increase. Retirement is also a stage when one needs to do all the things they have wished to do but never had the time because they were working. One also needs to maintain their pre-retirement living standards and if possible improve their lifestyle. All this should be possible without one having to worry about money. Current reports however show that most people are not able to do the mentioned things even though that is their desire because of lack of finances in retirement. Worse is the fact that retirement assets get depleted prematurely and retirees being forced to look for work or be dependent on their relatives. These problems call for understanding of the importance of financial planning for retirement and why retirees run out of money prematurely. It is on these needs that this study is based on. This paper seeks to spell out the importance of financial planning for retirement.
This paper examines the role private investments play in providing retirement security for current as well as future retirees. The article investigates the extent to which various income groups of retired households as well as those who are yet to retire have invested in savings accounts, stocks, private pensions, money market funds, individual retirement accounts and tax exempt securities. The study focuses on the ability of retirees to supplement pension benefits with additional savings. The article argues that pension coverage is lower for future retirees than it is for current ones particularly for the high income earners. It concludes that pensions and private investments are important in providing retirement security to high income earners who need to supplement Social Security benefit which favors low income household more. The paper found that financial planning for retirement through private saving is very important particularly for high income households.
In this article, the author evaluates the five risks to retirement income which must be thoroughly evaluated when planning financially for retirement. The article identifies the potential of one outliving their assets due to increased longevity, threat posed by rising leaving costs, excessive withdrawal rates, rising cost of health care and increasing inflation as the major challenges most retirees face and which might result to them running out of money to sustain themselves in retirement if they are not appropriately addressed through sound financial planning for retirement.
This article is important as it emphasizes on the need for Americans to individually plan for their retirement and stop relying on governmental run programs such as Social Security. The article argues that Social Security only replaces 30 percent of ones salary making it impossible for them to maintain the same lifestyle they had before retirement. one has to have other sources of income to provide the rest of the needed money. This article encourages employees to plan for their retirement as early as is possible and make personal investments so as to safeguard their future. The author argues that those who rely on Social Security alone are likely to run out of money in their retirement.
This article is based on a survey that sought to establish the retirement planning objectives of financial planners and the challenges faced by their clients and by the planners in serving their clients. In spite of the differences in the nature of the financial services as well as practices of the professional planners, the study found a myriad of similar as well as different planning objectives and challenges. The need to be financially secure in retirement was found to be the most important and similar in all the retirement planning objectives studied. Other relevant objectives identified include maintaining self-sufficiency, improving ones lifestyle in retirement and maintaining the pre-retirement standard of living. Amongst the issues identified are accumulations issues one of which is preparing for the effect of postretirement inflation on ones retirement money. The paper is relevant to our study as it explains one of the reasons as to why future retirees could run out of money, and why retirement planning should concern income planning which are some of this studys objectives.
This book was used because it explains the recommended methods for qualitative studies and justifies why they should be used. This book particularly explains why semi-structured interviews are the most appropriate methods to use when collecting qualitative data. It also explains how to use this method so as to get rich in-depth data which is the main focus of qualitative studies. Other methods described are sampling and data analysis techniques. This book helped the researcher to determine the best method to apply in collection of data for this study.
This paper explains the importance of a financial planning program in preparing employees for retirement. The paper discusses why retirement planning is more essential now than any other time. It explains the importance of this planning to HR departments as well as employees. It found that employees are able to decide whether they have saved enough and can voluntarily leave the organization through early retirement which helps ease and reduce cases of involuntary layoffs. This article also gives six reasons as to why retirement financing is important today than it was before. Amongst the reasons given are increasing inflation, increasing longevity, possible cut back on Social Security, decreasing retirement age and possible inability to fund ones retirement and maintain the same lifestyle after retirement. It explains what financial planning (organizational) entails, the role of the Human Resource in this process, costs of financial planning for an organization, importance of employee seminars, one-on-one counseling as well as of giving a benefits summary to employees. The article goes on to explain what individual financial plans entail, how they are prepared, what they contain, their implementation, periodic review, support as well as evaluation by the service provider.
This book describes the various research methods available and what they entail. It explains what surveys are, the types, when to use them, their advantages as well as disadvantages. The book also explains the methods used to collect data in various types of researches, their advantages and disadvantages. Methods of analyzing particularly qualitative data are also described so that one can understand the best method to apply to their specific case. Methods of validation as well as their applicability are also discussed. This book is important as it enabled the researcher to identify the analysis and validation techniques to use for the study.
The article reports results of a continuing study on health and retirement by the University of Michigans Institute for Social Research in which it reveals that increased longevity is causing depletion of retirement assets and might leave those did not adequately plan financially for retirement by considering the longevity risk without money.
This paper is centered on retirement planning to come up with steady income in addition to Social Security that will fund a lengthy retirement. The article discusses three strategies to doing this. They include one taking the responsibility to handle and manage their own money, buying lifelong promises (an annuity, particularly an immediate one), and combining the approach of managing ones own retirement assets and that one of putting in under insurers. Combining the two is advantageous as it enables one to save and earn interest through the money invested with insurers and at the same time have money to take care of unexpected expenses using some of the amount under their control. This article also explains how one can build an income plan and the importance of doing so. It focuses on financial planning for retirement that will enable retirees to not to run out of money in spite of increased longevity or inflation rate.
In this article, the author focuses on the results of a behavioral financial study into the reasons as to why some people succeed in saving for their retirement while others fail. This article is important to our study as it emphasis on the need for people to take personal charge and bear the responsibility of funding their retirement (future) through proper financial planning for retirement. According to the article, success depends on how one handles the inclination to under save as well as to procrastinate. The author argues that saving and investing success requires one to overcome their worst inclinations. Amongst the findings of this study is that those who plan prosper. Planning has been described to involve calculating and estimating how much is needed to fund retirement years, setting the target and working towards achieving it. The article also emphasizes on the need for one to consult and attend seminars so as to gain knowledge on how to go about planning for retirement. This article basically explains what is crucial for successful financial planning for retirement.
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