According to the article on MarketWatch titled “10 reasons your retirement plan won’t cut it,” traditional 401(k)s, 403(b)s, IRAs, Roth IRAs and other types of plans provided by employers can be a tax-efficient way to generate money for retirement. While most come with different rules and contribution limits, these plans help people save money for retirement automatically from the time they start working.
While this is a necessary part of the process, these plans typically cannot supply workers with the money they need to live a comfortable retirement, especially with rising average life expectancies. The article says most plans are not designed to sustain long-lasting income, leaving most people unable to count on receiving a constant income.
Chris Hobart, CEO and founder of Hobart Financial Group, a leading wealth management company, agrees that retirement plans are not able to provide lifetime income for most workers. “Retirement plans from employers are usually a good way to kick start saving for retirement,” he says. “Unfortunately, they cannot supply an individual with a prolonged income that covers all expenses during retirement. Most plans have a limited allowable contribution amount, and even with that, most people do not contribute enough to generate a decent amount of savings.”
Hobart suggests investing in other types of strategies to generate spendable retirement income like annuities. “Certain annuities can provide people with sustainable income for life,” he says. “Most investments fluctuate with the market, but that’s no reason to be discouraged. Tax-deferrable annuities can really help an individual grow funds for their future. It’s important to contact a retirement investment adviser to discuss ways to supplement your current employer-provided retirement plan.”