Port Vila, Vanuatu (PressExposure) September 17, 2009 -- General Motors pension plan is underfunded by roughly $20 billion, was revealed in a recent report by USA Today. The amount benefits of retirees could receive is in serious danger. GM is meeting with the Treasury to reduce some retiree benefit obligations by around two-thirds.
Billions of dollars have been loped off world-wide share markets, as they continue to remain in an unpredictable volatile state. Real estate has plummeted around the globe. Long term aims for superannuation funds have been annihilated.
According to a recent publication by Wharton School, United States, "Retirement accounts have lost from $2 to $4 trillion, as stocks have tumbled nearly 50 percent from their peak in 2007". Both private and public pensions are now billions of dollars short of their minimum requirements.
Harsh decisions are going to have to be made by governments globally, of how to make up the short fall, even to raising taxes on already over-taxed taxpayers. The recent losses have soundly upset financial experts, as personal retirement plans remain in a shambles.
Head of TNS Finance, UK, Sharon Rees, says "The UK is entering a state of pension meltdown".
Hymans Robertson's recent survey showed that 7 out of 10 people polled believed they weren't saving enough for retirement, with a staggering 83% of 16-24 year olds in agreement.
The expectancy life average has escalated to 79 years for males and 84 for females. There is a large decrease in the number of people who believe they will not have enough money to live comfortably beyond five years into retirement. These results were published in the Austin Business Journal survey. The retirement plan of 1.85 million people in the UK alone has been already postponed by the recession. Only 44% feel comfortable that their retirement plans are sure.
The task of accumulating retirement income has shifted from the employer to the employee. Some employers are finding it hard to maintain their level of contribution, while others are cutting back, or eliminating them completely.
Alicia H. Munnell, director of the Center for Retirement Research at Boston College, testified to the U.S. Congress in February, âEven before the financial crisis, we have been concerned about the ability of 401(k) plans to provide secure retirement income.
In other words, defined contribution retirement plans place money management and investing in the hands of people who really don't, on the average, have the specialized financial knowledge, or skills necessary, for making the best decisions about investment and retirement income".
A report from "The Detour on Americaâs Road to Retirement", disclosed that retirees wonât be able to retire debt free. Baby boomers will have debts of at least $50,000 in non-mortgage debt in 2009, an increase from 12% in 2007. Parents of the baby boomers will have an average debt level of $25,000.
Many people are either going to have to work longer than expected, or accept a lower standard of living. Most people are going to have to find ways to supplement their super fund.
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