Preparing for Certainty During Uncertain Times, the Importance for 401k Retirement Planning

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    Nov 22, 2012
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“Today a hope of many years' standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.”
Franklin Roosevelt's Statement on Signing the Social Security Act 
August 14, 1935          

After seventy-seven years, civilization has fallen into similar tendencies of insecurities. As a younger person, I have not invested too much consideration towards a retirement plan, but the current contingencies concerning Social Security benefits has encouraged me to better understand the policies that continue to favor the alternative solutions for retirement compensation. Social Security will become obsolete and younger generations will have to rely on plans such as 401k to provide their retirement compensation. It is imperative for future generations to acclimate themselves with the formalities and policies of a 401k retirement plan and develop a course of preparation for financial stability after retirement. Ultimately educating oneself is essential for the protection of ones future.

The basic components of the 401k retirement plan are based on the employee investing a percentage of income into a 401k savings. The 401k earns continuous interest defined by the institution that the employee has invested with. The amount escalates through continuous cash deposits and, depending on the agreed terms, a percentage of interest that is paid regularly. In most cases, once a person retires, the 401k has established the necessary amount to provide a person with sufficient financial compensation. The 401k account can be accessed by a lump sum at any time, but this action is met with a higher percentage of taxation and potential fees or penalties agreed upon when it was established. Depending on the person’s understanding in selecting their retirement, lump sum compensation can prove either to be a solid investment that generates a sufficient compensation or could potentially become an investment risk and render insufficient for covering a person’s cost of living. The 401k places the responsibility of retirement planning upon the individual, and if a person happens to misinterpret or unintentionally makes a poor investment that was misleading anyways, then the burden of financial security falls upon the individual.

In 1935, Franklin D Roosevelt guided the American people through hardship and depression and strengthened the people and the quality of life, in 2012, the hardships that surround us today continues to escalate, but our Government has become a major contributor to some of the hardships, and   avoid taking responsibility for the actions that we are by law obligated to. American lives are becoming a more “You are on your own” society similar to our retirement planning. So we prepare ourselves for whatever may come. Education and research are fundamental and crucial. 

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