Take Control of Your Retirement No One Protects Your Best Interests Like You
It's a tale as old as time. You are fresh out of college and trying to figure out what to do with your life. There are lots of opportunities, but you follow your parents' advice and settle on a nice, secure government job. Time passes...
30 years later, you have put in three decades with the government. Was it tough? It sure was, but now you are looking at a "guaranteed retirement" and it all seems worth it. Of course, not everything is what it seems, as certain California employees learned to their dismay in 2017 when CalPERS, the state's retirement fund, issued a statement indicating it would cut retirement benefits by over 60 percent for 191 people.
Stop and think about how this probably played out for those employees:
Imagine you were planning on having an income of $100,000 a year when you retired, but you just got a letting in the mail saying that you will now receive only $40,000. You played "by the rules" for 30 years, only to find out you are getting less than half of what the rules said you would receive. How would that feel? Pretty awful!
Now, the back story here is that a service consortium failed to fund its pension plan the way CalPERS requires due to losing a major contract. CalPERS stated it had to cut benefits to retirees "despite repeated and numerous attempts to avoid this terrible situation." Regardless of whether you think the cut in benefits was fair, however, the lesson remains:
You cannot rely on your employer to provide the retirement income they guarantee you.
You never know what is going to happen to your employer. You never know what is going to happen to that "guaranteed" pension. You never know for sure that the people in charge of your retirement account are caring for it the way you would unless you are the one controlling that account.
If you want to be able to retire with financial security and dignity, it is up to you to make sure you have control of your retirement savings and, furthermore, that you understand how to best leverage those savings toward a secure financial future.
Do you have to do this alone? Absolutely not. There are many, many resources (including myself and SDI Society, for starters) here to help you. You are not alone when it comes to controlling your self-directed retirement account, but you are the sole person most likely to look out for your best financial interests. Educate yourself constantly about how tax advantages, public policy, and investment strategies are evolving and changing. Take control of your future.
by Tim Berry
Tim Berry has spent more than 20 years helping people with self-directed IRAs and self-directed 401(k)s. Learn more at IRAIdeas.com or email Tim at [email protected]