1. Overview of the Proposed Topic Research
Current research shows that the golden years of retirement are losing their gleam for a considerable number of people particularly employees. Inadequate personal savings, rapidly increasing longevity as well as the uncertainty surrounding Social Security are some of the factors that have raised concerns over the quality of postretirement life for current as well as future retirees in the United States. Todays global atmosphere suggests uncertainty wherever one turns implying that the future always is uncertain. The credit crunch crisis that has affected the global economy is a clear illustration of uncertainty. Because most people had not prepared for such a turbulent future, many have adversely been affected by the consequences. The same goes for ones finances and particularly in their retirement where they wish to have the security as well as financial comfort so that they do not have to worry about money problems. 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. This paper seeks to spell the importance of financial and retirement planning.
Retirement is something that one has to seriously plan for as it brings with itself a myriad of problems as well as potential disasters. Planning for retirement implies that one is planning for ones golden years. It is more than just crunching with numbers and involves evaluating ones lifestyle and tweaking their current finances as well as investments with the intention of reaching goals for a safe and comfortable future (Updegrave, 2006). Ideally, no one should be forced to work after retirement because of financial problems.
Planning for retirement has several benefits. In addition to planning for the later years after working it gives one a sense of comfort as well as financial security in the years before and after retirement. Planning for retirement enables one to get a firm idea of how their future will be like and gives them the freedom to pursue the things they have always wanted to do without having to worry about changing jobs to those that are easier or taking time off work. In addition to this, it reduces pressure on ones family to take care of them because of the importance of independence in old age to many people.
To understand the importance of retirement financing, it is worth to note the following factors and consider their implications. The oldest baby boomers, the group that forms the largest percentage of the United States corporate workforce have currently reached their retirement years. It is approximated that the number of people over the age 65 will have doubled by the year 2020, a fact that raises concerns on whether Social Security will be able to manage the number. It is in fact feared that Social Security benefits will either be pared or totally be totally eliminated. The Longevity of Americans has also increased. Research shows that the number of Americans over the age of 100 is rapidly increasing and will be about 40 times more than it currently is by 2050. The cost of maintaining ones standard of living during retirement is also high as Social Security gives only a small percentage of ones needs (Carnahan, 2005). For one to maintain the pre-retirement standards of living, they must have other sources of finance such as personal investments or employer pension plans. Continuing inflations as well as early retirements due to economic crises imply that retirees will need more money in retirement but have less income. Surveys also show that many employees are not sure that they will have enough money to sustain their current lifestyle in retirement. 51 percent of those studied will only be able to finance at least half of their retirement implying that future retirees are likely to run out of money unless they make good financial plans for their retirement (Lewis, 1988).
Based on these facts, the research seeks to investigate why financial planning for retirement is more essential today than it ever was. To achieve this, the study will establish the number one fear in retirement and why the main concern in retirement should be income planning. The effect of increase in longevity on money saved for retirement and why future retirees are likely to run out of money will also be established.
1.1 Research ProblemPurpose of the Study
Recent studies as well as observations show that many Americans are not enjoying their retirement years as they should. Of concern is the fact that many people who are past the age of retirement (over 55 years) are being forced to go back to working again as they have run out of their retirement funds. This paper seeks to address this issue by investigating why financial planning is important when one is planning for their retirement so that they can avoid risks posed by factors such as increased longevity and inflation which could result to retirees running out of money.
1.2 Research Objectives and Questions
In order to address the research problem and answer the research question. There are a number of objectives that the researcher seeks to attain.
1. The research seeks to establish why the main concern in retirement should be income saving.
2. The study will investigate how increased longevity and increased life expectancy affects retirement assets and funds.
3. The study seeks to determine the number one fear in retirement.
4. The study will investigate why future retirees are likely to outlive their retirement assets hence run out of money.
1.3 Research Rationale
Retirement is a stage where one is supposed to relax and do the things they enjoy without having to worry about money. Most people desire this hence make efforts towards planning for these years. Observations however show that that people are not planning as effectively as they should for their retirement. Most retirees are not able to maintain the same standard of living they had be fore retirement. The lifestyle of many retirees has deteriorated yet this is a stage when one is supposed to have a healthy lifestyle. The uncertainties in the economy which are causing inflations as well as increased life expectancy in the United States due to advancements in medicines indicate problems for future retirees who are not financially planning for their retirement. Worse still is the fact that the Social Security program which most people in formal employment rely on to fund their retirement is undergoing problems which might force it to considerably cut back on funding or be eliminated altogether. The indications are that future retirees are going to outlive their retirement assets and run out money unless they effectively plan financially for their retirement. This study is important as its findings and recommendations will go a long way in ensuring that future retirees are able to sustain themselves and have good quality of life.
1.4 Research Context
This research will examine only three groups of people retired households, not-retired households and financial services professionals. The study will focus on middle and high income households. The study will also focus on those who are in formal employment. Low income earners and self-employed people will be excluded. Though this study will use responses from financial services professionals, the study is not interested in the different retirement products available or which ones are suitable. The study is only interested in the responses from these professionals on why financial planning for retirement is important, why retirees might run out of money and on the effects of increased longevity on funds reserved for retirement. Use of not-retired households is to examine how well households are preparing for retirement and whether they are financially preparing for it. Data from retired households is the most crucial in this study as the researcher seeks to answer most of the research questions based on the observations made on this group and on their responses which are based on personal experiences.
1.5 Significance of the Study
The ongoing global financial crisis is a clear indication of how uncertain this life can be and why one should adequately prepare for eventualities so that they are affected by the consequences. Most people have left the task retirement planning to their employers and rely on Social Security as their source of funding in their old age when they are no longer working. Current developments however show that Social Security is not as reliable as it was and that most retirees who depend on it are running out of money and being forced to go back to work. Increased longevity due to technological break through that has made medicine and treatment more available and affordable is another reason as to why people have to prepare well financially for their retirement so that they do not outlive their savings. Increasing inflation rates and their effect on retirees is also alarming. By carrying out this study, the researcher seeks to identify consequences of not preparing adequately financially for retirement. The findings of this study and the recommendations will go a long way in helping avoid future cases of retirees running out of money or outliving their retirement funds. It will also reduce cases of future retirees being dependent and sometimes a burden to their relatives. This study therefore seeks to increase the quality of life of future retirees.
1.6 Hypotheses
Based on the research questions and literature review, the study came with the following hypotheses which will be tested so as to answer the research question.
The main concern in retirement should be income planning because this is the time when people are not working hence do not earn wages. Retirement is also a stage crucial needs including the need for quality health care which requires a lot of money arise.
Increased longevity and increased life expectancy will deplete retirees retirement assets prematurely forcing them to either go back to work or become dependent on others.
Not having enough finances to sustain one through retirement due to reduced Social Security Funding, increased longevity as well as inflation forcing one to go back to work or become dependent is the number one fear in retirement.
Future retirees are likely to run out of money because of increased longevity, continued inflations without equivalent income increases, reduced Social Security Funding and lack of proper financial planning for their retirement.
2. Brief Review of Related Literature
Retirement is a stage in life which one has to seriously plan for as it is characterized by many problems and potential disasters. This is mainly because one is usually not working hence are not getting any wages. Planning for retirement involves evaluating ones lifestyle ad tuning their current finances and investments with the purpose of having a safe and comfortable future (Updegrave, 2006). No one should not be forced to go back to work in their golden years because of lack of money.
Planning for retirement is important. In addition to planning for the later years when will not be working hence earning a salary, it gives one a sense of comfort as well as financial security in the years before and after retirement (Updegrave, 2006). Planning for retirement makes it possible for one to view their future and can enjoy all the things they have wanted to do but could not in their earlier years because they were working. It allows one to improve their lifestyle ad take care of all their personal needs including health which is very crucial at this stage particularly for those who retire in old age without having to worry about where the money will come from (Updegrave, 2006). It makes it possible for one to maintain the living standard they before they retired and even improve so that they are more comfortable. Planning for retirement financially ensures that one is independent hence reduces the pressure on their family to take care of them.
To understand the importance of retirement financing, it is worth to note the following factors and consider their implications. The oldest baby boomers, the group that forms the largest percentage of the United States corporate workforce have currently reached their retirement years (Carnahan, 2005). It is approximated that the number of people over the age 65 will have doubled by the year 2020, a fact that raises concerns on whether Social Security will be able to manage the number. It is in fact feared that Social Security benefits will either be pared or totally be totally eliminated. The Longevity of Americans has also increased. Research shows that the number of Americans over the age of 100 is rapidly increasing and will be about 40 times more than it currently is by 2050 (Carnahan, 2005). The cost of maintaining ones standard of living during retirement is also high as Social Security gives only a small percentage of ones needs (Carnahan, 2005). For one to maintain the pre-retirement standards of living, they must have other sources of finance such as personal investments or employer pension plans. Continuing inflations as well as early retirements due to economic crises imply that retirees will need more money in retirement but have less income. Surveys also show that many employees are not sure that they will have enough money to sustain their current lifestyle in retirement. 51 percent of those studied will only be able to finance at least half of their retirement implying that future retirees are likely to run out of money unless they make good financial plans for their retirement (Lewis, 1988).
Based on these facts, the research seeks to investigate why financial planning for retirement is more essential today than it ever was. To achieve this, the study will establish the number one fear in retirement and why the main concern in retirement should be income planning. The effect of increase in longevity on money saved for retirement and why future retirees are likely to run out of money will also be established.
3. Methodology
3.1 Research Design and Data Collection
Based on the objectives of the study, it can be regarded as a qualitative explanatory study which seeks to explain the significance of financial planning in retirement planning and the impact of increasing life expectancy on money in retirement. The researcher will therefore be seeking to analyze responses rather than numerical data though the number of retirees comfortably financing their retirement is significant.
A cross sectional survey will be used in this study. Semi-structured interviews and questionnaires which will be administered face to face will be used to collect data. The questionnaires will use both closed ended and open ended questions. The responses from interviews will be recorded and transcriptions made for effective analysis. The researcher chose to use semi-structured interviews as literature refers to them as the best to use in qualitative studies (King, 2004). This is because semi-structured interviews allow the researcher to collect in-depth data as they are able to tailor questions that probe the respondents reasoning and seek further clarification in addition to following a standard set of questions. Semi-structured interviews are also valued for their flexibility as they allow the researcher to assess the complexity of a situation (Saunders, Lewis, Thornhill, 2007).
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.
3.2 Sampling
This research will use random sampling to attain subjects. Responses will be collected from three groups of people who are relevant to the study retired households not retired households and financial services professionals.
3.3 Data Analysis
The study will employ Thematic analysis to analyze the responses collected using the semi-structured interviews and open-ended questions. This tool analyzes the descriptions line by line allowing rich in-depth meaning to be derived from the responses. It also allows the researcher to highlight similarities in the responses from various interviews. Thematic analysis classifies the descriptions according to the themes that emerge which allows the research to identify matching patterns hence can quantify the data (Saunders, Lewis, Thornhill, 2007). Data collected using the Likert tool will be analyzed using SPSS which is a computer assisted program that presents the results in form of charts or graphs.
3.4 Validation
The study will use multiple perspectives as the method of validation. This is because triangulation is not available for this particular case. In the study, the researcher will take the findings back to the respondents (subjects) so that they can give their opinion based on their experiences. The researcher will also seek the opinion of other researchers who have carried prior studies in the same field. This will be done to determine how the findings compare with other experienced peoples opinions.
Current research shows that the golden years of retirement are losing their gleam for a considerable number of people particularly employees. Inadequate personal savings, rapidly increasing longevity as well as the uncertainty surrounding Social Security are some of the factors that have raised concerns over the quality of postretirement life for current as well as future retirees in the United States. Todays global atmosphere suggests uncertainty wherever one turns implying that the future always is uncertain. The credit crunch crisis that has affected the global economy is a clear illustration of uncertainty. Because most people had not prepared for such a turbulent future, many have adversely been affected by the consequences. The same goes for ones finances and particularly in their retirement where they wish to have the security as well as financial comfort so that they do not have to worry about money problems. 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. This paper seeks to spell the importance of financial and retirement planning.
Retirement is something that one has to seriously plan for as it brings with itself a myriad of problems as well as potential disasters. Planning for retirement implies that one is planning for ones golden years. It is more than just crunching with numbers and involves evaluating ones lifestyle and tweaking their current finances as well as investments with the intention of reaching goals for a safe and comfortable future (Updegrave, 2006). Ideally, no one should be forced to work after retirement because of financial problems.
Planning for retirement has several benefits. In addition to planning for the later years after working it gives one a sense of comfort as well as financial security in the years before and after retirement. Planning for retirement enables one to get a firm idea of how their future will be like and gives them the freedom to pursue the things they have always wanted to do without having to worry about changing jobs to those that are easier or taking time off work. In addition to this, it reduces pressure on ones family to take care of them because of the importance of independence in old age to many people.
To understand the importance of retirement financing, it is worth to note the following factors and consider their implications. The oldest baby boomers, the group that forms the largest percentage of the United States corporate workforce have currently reached their retirement years. It is approximated that the number of people over the age 65 will have doubled by the year 2020, a fact that raises concerns on whether Social Security will be able to manage the number. It is in fact feared that Social Security benefits will either be pared or totally be totally eliminated. The Longevity of Americans has also increased. Research shows that the number of Americans over the age of 100 is rapidly increasing and will be about 40 times more than it currently is by 2050. The cost of maintaining ones standard of living during retirement is also high as Social Security gives only a small percentage of ones needs (Carnahan, 2005). For one to maintain the pre-retirement standards of living, they must have other sources of finance such as personal investments or employer pension plans. Continuing inflations as well as early retirements due to economic crises imply that retirees will need more money in retirement but have less income. Surveys also show that many employees are not sure that they will have enough money to sustain their current lifestyle in retirement. 51 percent of those studied will only be able to finance at least half of their retirement implying that future retirees are likely to run out of money unless they make good financial plans for their retirement (Lewis, 1988).
Based on these facts, the research seeks to investigate why financial planning for retirement is more essential today than it ever was. To achieve this, the study will establish the number one fear in retirement and why the main concern in retirement should be income planning. The effect of increase in longevity on money saved for retirement and why future retirees are likely to run out of money will also be established.
1.1 Research ProblemPurpose of the Study
Recent studies as well as observations show that many Americans are not enjoying their retirement years as they should. Of concern is the fact that many people who are past the age of retirement (over 55 years) are being forced to go back to working again as they have run out of their retirement funds. This paper seeks to address this issue by investigating why financial planning is important when one is planning for their retirement so that they can avoid risks posed by factors such as increased longevity and inflation which could result to retirees running out of money.
1.2 Research Objectives and Questions
In order to address the research problem and answer the research question. There are a number of objectives that the researcher seeks to attain.
1. The research seeks to establish why the main concern in retirement should be income saving.
2. The study will investigate how increased longevity and increased life expectancy affects retirement assets and funds.
3. The study seeks to determine the number one fear in retirement.
4. The study will investigate why future retirees are likely to outlive their retirement assets hence run out of money.
1.3 Research Rationale
Retirement is a stage where one is supposed to relax and do the things they enjoy without having to worry about money. Most people desire this hence make efforts towards planning for these years. Observations however show that that people are not planning as effectively as they should for their retirement. Most retirees are not able to maintain the same standard of living they had be fore retirement. The lifestyle of many retirees has deteriorated yet this is a stage when one is supposed to have a healthy lifestyle. The uncertainties in the economy which are causing inflations as well as increased life expectancy in the United States due to advancements in medicines indicate problems for future retirees who are not financially planning for their retirement. Worse still is the fact that the Social Security program which most people in formal employment rely on to fund their retirement is undergoing problems which might force it to considerably cut back on funding or be eliminated altogether. The indications are that future retirees are going to outlive their retirement assets and run out money unless they effectively plan financially for their retirement. This study is important as its findings and recommendations will go a long way in ensuring that future retirees are able to sustain themselves and have good quality of life.
1.4 Research Context
This research will examine only three groups of people retired households, not-retired households and financial services professionals. The study will focus on middle and high income households. The study will also focus on those who are in formal employment. Low income earners and self-employed people will be excluded. Though this study will use responses from financial services professionals, the study is not interested in the different retirement products available or which ones are suitable. The study is only interested in the responses from these professionals on why financial planning for retirement is important, why retirees might run out of money and on the effects of increased longevity on funds reserved for retirement. Use of not-retired households is to examine how well households are preparing for retirement and whether they are financially preparing for it. Data from retired households is the most crucial in this study as the researcher seeks to answer most of the research questions based on the observations made on this group and on their responses which are based on personal experiences.
1.5 Significance of the Study
The ongoing global financial crisis is a clear indication of how uncertain this life can be and why one should adequately prepare for eventualities so that they are affected by the consequences. Most people have left the task retirement planning to their employers and rely on Social Security as their source of funding in their old age when they are no longer working. Current developments however show that Social Security is not as reliable as it was and that most retirees who depend on it are running out of money and being forced to go back to work. Increased longevity due to technological break through that has made medicine and treatment more available and affordable is another reason as to why people have to prepare well financially for their retirement so that they do not outlive their savings. Increasing inflation rates and their effect on retirees is also alarming. By carrying out this study, the researcher seeks to identify consequences of not preparing adequately financially for retirement. The findings of this study and the recommendations will go a long way in helping avoid future cases of retirees running out of money or outliving their retirement funds. It will also reduce cases of future retirees being dependent and sometimes a burden to their relatives. This study therefore seeks to increase the quality of life of future retirees.
1.6 Hypotheses
Based on the research questions and literature review, the study came with the following hypotheses which will be tested so as to answer the research question.
The main concern in retirement should be income planning because this is the time when people are not working hence do not earn wages. Retirement is also a stage crucial needs including the need for quality health care which requires a lot of money arise.
Increased longevity and increased life expectancy will deplete retirees retirement assets prematurely forcing them to either go back to work or become dependent on others.
Not having enough finances to sustain one through retirement due to reduced Social Security Funding, increased longevity as well as inflation forcing one to go back to work or become dependent is the number one fear in retirement.
Future retirees are likely to run out of money because of increased longevity, continued inflations without equivalent income increases, reduced Social Security Funding and lack of proper financial planning for their retirement.
2. Brief Review of Related Literature
Retirement is a stage in life which one has to seriously plan for as it is characterized by many problems and potential disasters. This is mainly because one is usually not working hence are not getting any wages. Planning for retirement involves evaluating ones lifestyle ad tuning their current finances and investments with the purpose of having a safe and comfortable future (Updegrave, 2006). No one should not be forced to go back to work in their golden years because of lack of money.
Planning for retirement is important. In addition to planning for the later years when will not be working hence earning a salary, it gives one a sense of comfort as well as financial security in the years before and after retirement (Updegrave, 2006). Planning for retirement makes it possible for one to view their future and can enjoy all the things they have wanted to do but could not in their earlier years because they were working. It allows one to improve their lifestyle ad take care of all their personal needs including health which is very crucial at this stage particularly for those who retire in old age without having to worry about where the money will come from (Updegrave, 2006). It makes it possible for one to maintain the living standard they before they retired and even improve so that they are more comfortable. Planning for retirement financially ensures that one is independent hence reduces the pressure on their family to take care of them.
To understand the importance of retirement financing, it is worth to note the following factors and consider their implications. The oldest baby boomers, the group that forms the largest percentage of the United States corporate workforce have currently reached their retirement years (Carnahan, 2005). It is approximated that the number of people over the age 65 will have doubled by the year 2020, a fact that raises concerns on whether Social Security will be able to manage the number. It is in fact feared that Social Security benefits will either be pared or totally be totally eliminated. The Longevity of Americans has also increased. Research shows that the number of Americans over the age of 100 is rapidly increasing and will be about 40 times more than it currently is by 2050 (Carnahan, 2005). The cost of maintaining ones standard of living during retirement is also high as Social Security gives only a small percentage of ones needs (Carnahan, 2005). For one to maintain the pre-retirement standards of living, they must have other sources of finance such as personal investments or employer pension plans. Continuing inflations as well as early retirements due to economic crises imply that retirees will need more money in retirement but have less income. Surveys also show that many employees are not sure that they will have enough money to sustain their current lifestyle in retirement. 51 percent of those studied will only be able to finance at least half of their retirement implying that future retirees are likely to run out of money unless they make good financial plans for their retirement (Lewis, 1988).
Based on these facts, the research seeks to investigate why financial planning for retirement is more essential today than it ever was. To achieve this, the study will establish the number one fear in retirement and why the main concern in retirement should be income planning. The effect of increase in longevity on money saved for retirement and why future retirees are likely to run out of money will also be established.
3. Methodology
3.1 Research Design and Data Collection
Based on the objectives of the study, it can be regarded as a qualitative explanatory study which seeks to explain the significance of financial planning in retirement planning and the impact of increasing life expectancy on money in retirement. The researcher will therefore be seeking to analyze responses rather than numerical data though the number of retirees comfortably financing their retirement is significant.
A cross sectional survey will be used in this study. Semi-structured interviews and questionnaires which will be administered face to face will be used to collect data. The questionnaires will use both closed ended and open ended questions. The responses from interviews will be recorded and transcriptions made for effective analysis. The researcher chose to use semi-structured interviews as literature refers to them as the best to use in qualitative studies (King, 2004). This is because semi-structured interviews allow the researcher to collect in-depth data as they are able to tailor questions that probe the respondents reasoning and seek further clarification in addition to following a standard set of questions. Semi-structured interviews are also valued for their flexibility as they allow the researcher to assess the complexity of a situation (Saunders, Lewis, Thornhill, 2007).
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.
3.2 Sampling
This research will use random sampling to attain subjects. Responses will be collected from three groups of people who are relevant to the study retired households not retired households and financial services professionals.
3.3 Data Analysis
The study will employ Thematic analysis to analyze the responses collected using the semi-structured interviews and open-ended questions. This tool analyzes the descriptions line by line allowing rich in-depth meaning to be derived from the responses. It also allows the researcher to highlight similarities in the responses from various interviews. Thematic analysis classifies the descriptions according to the themes that emerge which allows the research to identify matching patterns hence can quantify the data (Saunders, Lewis, Thornhill, 2007). Data collected using the Likert tool will be analyzed using SPSS which is a computer assisted program that presents the results in form of charts or graphs.
3.4 Validation
The study will use multiple perspectives as the method of validation. This is because triangulation is not available for this particular case. In the study, the researcher will take the findings back to the respondents (subjects) so that they can give their opinion based on their experiences. The researcher will also seek the opinion of other researchers who have carried prior studies in the same field. This will be done to determine how the findings compare with other experienced peoples opinions.
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