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Retirement Plans: 401(k)s, IRAs, and Other Deferred Compensation Approaches 11th Edition by Everett Allen,Joseph Melone,Jerry Rosenbloom,Dennis Mahoney
Edition 11ISBN: 978-0073377438Retirement Plans: 401(k)s, IRAs, and Other Deferred Compensation Approaches 11th Edition by Everett Allen,Joseph Melone,Jerry Rosenbloom,Dennis Mahoney
Edition 11ISBN: 978-0073377438 Exercise 2
Describe the basic economic problems facing the aged.
Explanation
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Economic Problems basically refers to the financial problems faced by individuals during their lifespan. With age, comes retirement which results in permanent leaving of workforce such that an individual relies upon his savings and benefits through social security and other employer benefit programme invested in for its daily expenses.
This phase is quite tough period as with age, earning capacity decreases but the expenses remain same. Few basic economic problems faced by aging individuals are-
1. Standard of living after retirement.
It is commonly assumed that with retirement, the expenses of an individual decreases because of diversion of responsibility however this is not completely correct as most of the individual's expenses increases because of the custodial care they usually need with increasing age and also the increased inflation might result in the same standard of living to be more expensive which does not allow the idea of retirement to be related with the reduced expenses due to low standard of living.
2. Employment Opportunities.
Individual sometimes lack adequate savings for them to retire and meet their expenses and as such they are forced to work even after 65 years of age (normal retirement age) to maintain their standard of livings but this is also not very helpful as most individual due to physical or mental inefficiency are not provided with adequate employment opportunities. Also technological advancement, retirement plans etc. has added to the problem by making 65 years of age a bar for an individual after which employment opportunities for individual decline to a great extent.
3. Individual savings
Individual are required to save more for their old age in various retirement plan so as to maintain a substantial standard of living without depleting their accumulated savings. For the purpose of the same, many retirement plans and laws regulating them has been established by the government so that this could encourage individuals to save adequately for their older self.
4. Increasing Longevity
Individuals living longer than expected faces the economic problem of continuing to meet their daily expenses. Usually during the earning period, individuals save money has per an expected life age after retirement but most of the times the actual age surpasses this expected age and results in depletion of accumulated savings leading to a huge problem for individual to survive.
These are the basic economic problems faced by an individual in aging years after retirement.
This phase is quite tough period as with age, earning capacity decreases but the expenses remain same. Few basic economic problems faced by aging individuals are-
1. Standard of living after retirement.
It is commonly assumed that with retirement, the expenses of an individual decreases because of diversion of responsibility however this is not completely correct as most of the individual's expenses increases because of the custodial care they usually need with increasing age and also the increased inflation might result in the same standard of living to be more expensive which does not allow the idea of retirement to be related with the reduced expenses due to low standard of living.
2. Employment Opportunities.
Individual sometimes lack adequate savings for them to retire and meet their expenses and as such they are forced to work even after 65 years of age (normal retirement age) to maintain their standard of livings but this is also not very helpful as most individual due to physical or mental inefficiency are not provided with adequate employment opportunities. Also technological advancement, retirement plans etc. has added to the problem by making 65 years of age a bar for an individual after which employment opportunities for individual decline to a great extent.
3. Individual savings
Individual are required to save more for their old age in various retirement plan so as to maintain a substantial standard of living without depleting their accumulated savings. For the purpose of the same, many retirement plans and laws regulating them has been established by the government so that this could encourage individuals to save adequately for their older self.
4. Increasing Longevity
Individuals living longer than expected faces the economic problem of continuing to meet their daily expenses. Usually during the earning period, individuals save money has per an expected life age after retirement but most of the times the actual age surpasses this expected age and results in depletion of accumulated savings leading to a huge problem for individual to survive.
These are the basic economic problems faced by an individual in aging years after retirement.
Retirement Plans: 401(k)s, IRAs, and Other Deferred Compensation Approaches 11th Edition by Everett Allen,Joseph Melone,Jerry Rosenbloom,Dennis Mahoney
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