I have a Roth IRA and I contribute to it on my own, is that enough?
Here's the thing, even it you manage to save $5,000 a year and invest in some well known stocks, the market has been bearish for several years now. Yes, some stocks have recovered and are at their same worth prior to the market when it tanked. This means that no profit was made either. If you purchased lets say stock with a ticker symbol Z, that was worth $150 dollars in 2008. By the time 2011 the stock was worth $99. It began to increase in value and is now worth $150. The same amount it was in 2008. Which means that you invested your money in an IRA, but no profit has been made. So you're back where you started. Inflation is a constant. If a person were to retire today with some of their stock having rebounded, the money or profit that was expected to be used for the sake of rising costs and inflation was never made. Therefore a Roth IRA is like having a regular bank account that does not earn any interest, isn't it? Really, if you have the same amount of money you started out with, it's like placing it in a checking account. The answer is no, just having a Roth IRA is not enough.
Should the government sponsor self funded cash balance retirement plans for individuals?
Just like retirement plans, health insurance is not offered in many companies or by employers. In this instance there are many people who are without health insurance and have to obtain insurance, discount plans or catastrophic insurance on their own; and thus did not have the "necessity" of employer based insurance plans. Because of this, once people became sick or ill they went to the emergency room and hospital for treatment or care as they were without a way to pay. This stiuation of dire emergency and without a way to afford payment has left hospitals and emergency facilities in debt and unable to remain in business because of the lack of money they receive. The need for everyone to have affordable health care as a result created a need for the affordable health care act and soon to be health care exchanges for individuals to buy affordabe health insurance. The government should sponsor self funded cash balance retirement plans that offset the cost of inflation. This means that instead of depending on a stock market that sees and saws from bull to bear and these days leaving you with just as much as you started out with, without any increase for inflation; one needs a plan that allows for inflation and will increase due to interest rates based on treasury bill, bonds or notes. With the self funded cash balance retirement plan, you would definitely end up with more than you started out with.
Here's how it would work:
A person creates an account online for the individual self funded cash balance retirement plan. The person contributes $150 for the month. With the intereste rate being based on a 10 year note at 2.25% for that month. An automatic 5% a year increase for the total amount of yearly contributions would certainly provide one with a steady increase of retirement money, without the changes in the market that cause stocks to decrease and profits to decline. The self funded cash balance retirement website allows one to see their savings and estimate what they could withdraw monthly based on the amount they currently have saved. One can also estimate the amount they need to save in order to retire comfortably.
Could a self funded cash balance retirement save the economy?
As people get older and make less money just to retire and remain on a fixed income, how are such retiree's supposed to be able to contribute to an economy if they do not earn enough to support themselves? This alternative in retirement savings, costs less than an annuity which is very costly to purchase, just as commercial insurance plans are. With the self funded cash balance retirement plan one can contribute up to $7,000 yearly and must begin taking distributions by the age of 70. The money can be withdrawn by the age of 65 in a lump sum or monthly payments. Yes, eventhough you have to begin to withdraw money by the age of 70, you can still contribute to your self funded cash balance retirement plan.
The self funded cash balance retirement plan- for those in the world who seem to have to go it alone!