Cincinnati, Ohio Estate Planning

Is the American Retirement Dream Really that Broken?

“Dire jeremiads about America’s looming retirement crisis are so common, that it seems retirementcrisis is one word.”

The doom-and-gloom prediction goes like this: Americans are all spendthrifts, living standards are going to take a major downward dive in retirement and Social Security will buckle from the pressure of too many workers supporting too many retirees. It’s a dark vision, says Next Avenue, in the article “What the Future of Retirement Looks Like,” but not all the news is terrible.

Yes, the nation’s retirement savings and the systems behind it are flawed, and Social Security reserves are going to need some boosting, if they are to remain in place beyond 2035. And yes, government obligations for pensions are increasing faster than the assets set aside to pay for them.

However, there’s also news from the non-partisan Urban Institute think tank that presents a more nuanced and less dismal picture of the retirement, especially for younger generations. It’s not cheery, but there are a number of trends that could point to a brighter economic foundation for policymakers who are open to making changes.

Here are four highlights from the report:

The importance of women’s work and earnings to the economy is a major factor. Retirement incomes are expected to increase over the next four decades, and a major factor behind this is women’s improving lifetime earnings. Median lifetime earnings for Xennials (1977-1985) women are predicted to be 129% higher, and 88% higher for Gen X women, taking inflation into account. That translates to improved Social Security benefits and higher savings rates in and out of retirement plans. This is despite the gender gap in pay, which is expected to continue.

Social Security will need to be shored up. A standard personal finance guide is that retirees need to be able to replace 75% of their income to maintain their standard of living in retirement. With no action from Washington, Social Security will have to cut benefits to pay only 75% of benefits. Living standards for Gen Xers and Xennials will be challenged. This remains a weak point, but we have been here before and it is hoped that our policymakers will not fail to act.

The future for old-age poverty rates depends on whether the Social Security trust funds are strengthened. Social Security will continue to be 85% of retirement for low-income beneficiaries, so any reductions in benefits will hit low-income households hard.

Boomers have the ability to improve retirement security for future generations. The biggest impact on Social Security reform starts showing up, when Gen Xers and Xennials turn 70. If boomers embrace enhanced retirement security as a legacy for future generations by actively campaigning to have Social Security strengthened, this will improve the retirement and aging for generations to come. Some of the presidential candidates have already added helping Social Security, as a part of their ideas for the future.

Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.

For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).

Reference: Next Avenue (July 25, 2019) “What the Future of Retirement Looks Like”

Getting Younger Heirs to Invest – Cincinnati Estate Planning

As is always the case, people in their 20s today have different priorities than their parents and grandparents. Younger priorities often do not include investing in the stock market. This has caused some consternation on Wall Street because today's young adults stand to inherit a lot of money from their parents.

Much has been written about the millennial generation, those people born between 1980 and 2000. Their work ethic, tastes and even general politeness have been questioned by older adults.

One thing that some believe is different about millennials is that they do not just get financial advice from professionals. They also get advice from friends, social media and online gurus.

This is seen as a problem for Wall Street firms who are in the business of selling financial advice and getting people to use their services to invest. Since estimates speculate that millennials will inherit $30 Trillion from their parents and grandparents, it is paramount for Wall Street to attract the attention of these young heirs.

As Bloomberg reports in an article titled "Wall Street Has Its Eyes on Millennials $30 Trillion Inheritance," Wall Street has taken an unusual strategy to attract the attention of millennials, using animation and cartoon like graphics.

Click over to read the original article and see some examples of the cartoon graphics Wall Street firms are using.

One takeaway: if you are planning on leaving a millennial a large inheritance, it might be a good idea to have an estate plan that takes the choice of investing away from them and giving it to a professional.

A trust, for example, could be used instead of leaving the inheritance outright with a professional trustee to help protect the inheritance from and for your millennial loved ones.

If Wall Street is concerned that millennials will not invest their inheritance prudently, perhaps it would be wise for you to be concerned as well. Engage the services of an experienced Cincinnati estate planning attorney to assist you with such planning.

If you have any questions about any of the information contained in this blog, see the estate planning website of Cincinnati attorney, David H. Lefton, Barron Peck Bennie & Schlemmer, 3074 Madison Road, Cincinnati, Ohio 45209, or contact him at 513-399-PLAN (7526) or by email at dhl@bpbslaw.com.

Reference: Bloomberg (March 3, 2015) "Wall Street Has Its Eyes on Millennials $30 Trillion Inheritance"