Retirement Savings – History & Trends
By Kaaren Hall
“The retirement crisis is the largest and most urgent global crisis we face today.”
The world’s most respected economists and financial analysts believe the pending retirement crisis is of paramount importance. So how did we land here? How have retirement plans evolved over the years? What risks and challenges do individuals face now? What emerging trends and strategies are arising that could save the global economy, and your financial future?
To really get the value, the importance, the right perspective, and the potential of self-directed IRA investing it is critical to understand the history and emerging trends…
A Quick History of Retirement Accounts
- 13 BC Roman Emperor Augustus began pensions for legionnaires with 20 years of service[1].
- In the 1st century the New Testament pioneered the idea of tithing to help the poor and widows.
- 1717 the Presbyterian Church begins a fund for retiring ministers[2].
- In 1889 century if Plymouth colonists were wounded in combat they received a pension[3] to support their families. However, the tax collection to raise these funds was often carried out by the ‘retired’ veterans themselves.
- In 1875 the first private pension plan in America was created by the American Express Railroad.
- 1900 – Life expectancy is 49 years old[4], with retired workers generally being disabled.
- In 1935 Franklin D. Roosevelt signed the Social Security Act into law. The act provided a fixed income for the disabled and retired workers aged 65+. This was funded by a 1% tax on employees and their employers. By 2006 that tax had risen to 7.65% on employees and employers.
- 1974 saw the birth of tax deductible IRAs.
- In 1981 401ks were established.
- Then Roth IRAs were born in 1997.
- In 2009 uDirect IRA Services, LLC was launched to assist individuals with self-directed IRA accounts (and Solo 401(k) accounts)
- August 31, 2016, S&P Dow Jones Indices and MSCI moved stock-exchange listed Equity REITs and other listed real estate companies from the Financials Sector of their Global Industry Classification Standard (GICS®) to a new Real Estate Sector.
Looking back a couple of century’s average people just never lived long enough to retire, nor was simply dropping out to play golf and sip tea all day something people strived for. They simply worked till they dropped.
The ‘golden years’ was a term originally coined to refer to the peak working and earning years of 25 to 40. Now it is commonly used to describe a coveted period of relaxation, golfing, bingo, and travel, with plenty of income, and no work. Of course those are the golden years most of us are craving today; and if we can get there in our 40s we’re even happier (at least until we get bored).
So how well are Americans doing at achieving the finances needed for a retirement, and preferably a comfortable, and timely one? With ten-thousand Baby Boomers reaching age 65 every day for the next decade this is a question in desperate need of an answer. Not only is this large sector of our population aging but the vast majority of pensions are under-funded and Social Security is anything but secure.
The answer may well be found by taking retirement into our own hands and investing in the asset classes we know best. That’s what self-directed IRAs allow us to do. We can move our retirement accounts over to self-directed accounts and invest in “alternative assets” like real estate, private stock, precious metals, notes and more to secure our financial future.
[1] http://www.seattletimes.com/nation-world/a-brief-history-of-retirement-its-a-modern-idea/ [2] https://en.wikipedia.org/wiki/Retirement_plans_in_the_United_States [3] http://www.thinkadvisor.com/2006/04/01/the-history-of-retirement [4] http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=1049&context=legal