Take Control of Your Retirement (Jeb Mills Commentary)

If you are between the ages of 25 and 55, you might be part of what some pundits are referring to as an impending retirement crisis.

Here is the short story: In 1980, more than 60 percent of private-sector workers could rely on a retirement plan from their employer. In other words, the employer made legally binding promises to provide specific levels of income and benefits to workers when they retired. This created a mindset in much of our culture that retirement planning was being done by someone else.

Since 1980, there has been a significant shift away from retirement plans paid by the employer and toward those paid by your savings contributions. So instead of being able to depend on your employer for what you will get when you retire, most plans today - like 401(k) programs - put you in charge of your contribution and your employer might or might not match part, or all, of it.

Today, only 7 percent of private-sector workers have employer-funded, or defined benefit, retirement plans. That means 93 percent cannot count on any specific income level when they retire beyond Social Security, which was never intended to be a main source of retirement income.

This means we need to begin to think differently. It means, most likely, you are the only person who is going to take responsibility for your retirement. It means you need to take ownership of your retirement planning and as early as possible.

Very few people question the wisdom of starting to save for a child's higher education while the child is still a baby. Just as that is viewed as a responsible, smart thing to do, so is saving for your retirement. Actually, your retirement might need to come before college savings plans. There are many options to help pay for college, but very few to help pay your living expenses after you stop working.

If I could recommend anything for someone who is looking to start retirement planning, it would be to start early with an amount you can afford to set aside, then increasing the amount as your income increases over the years. Regardless of the amount you start off with, simply starting early and increasing the amount over time can make the difference between a meager retirement and one that allows you to enjoy the fruits of your years of labor.

Don't fall into the trap of thinking there will be more time later to plan for retirement. There will always be more immediate demands on your salary, but very few real opportunities to save for your future. There are ways to plan for that future without shortchanging the present.

If your employer has a 401(k) contribution match program, contribute at least up to what your employer will match. It is free money. Then as changes occur in your life, re-evaluate where you are and where you want to end up.

Talk to a trained financial adviser. Such advisers can help you lay the groundwork for a stable and adequate retirement while avoiding pitfalls that could drain your investment.  

Much like diagnosing your own ailments from descriptions on websites, you could try to manage your own retirement planning online. But you would never take action on a possible medical problem without getting it checked out by a medical professional first. Don't ignore the same approach to retirement planning.

Information about financial planning is available on the Internet, but a trained adviser knows how to use that information to best serve your individual goals. They also have the ability to tailor a plan to fit your idea of the perfect retirement.

The bottom line is that, even if some pundits are correct and we, as a society, experience a retirement crisis, you, as an individual, have the power now to ensure that you have no such crisis personally - but only if you change your mindset and take responsibility for your future. You'll be glad later if you do that now.

(Jeb Mills is a sales manager and executive vice president at Arvest Asset Management in northwest Arkansas. He can be reached at (479) 575-1139 or at JMills@Arvest.com.)