Americans need to realize that they cannot and should not rely on any government for the financial future. It requires a disciplined saving strategy along with a globally diversified portfolio. You don’t have to know everything about investing but you do need to know the right things. Your retirement plan needs the assistance of an investor coach to keep you on track and disciplined through the tough times.

1) Making employees more aware of how critical it is to save now for their financial futureThis is the first step. After all, you need to be aware of a problem before you can address it. Our research report identifies six key possible threats to the ability of many Americans to afford a comfortable retirement:

Rising health care costs.  A recent Fidelity study projected a 65-yr old couple retiring today will need about $240k (or $10,750 per year) to cover health care costs not covered by Medicare (not including long term care). Since health care costs have been rising at 6% a year—more than twice the rate of inflation—future costs are likely to be much higher. As if that wasn’t bad enough, the study didn’t factor in the effect of future cuts in Medicare that may be needed to keep the program solvent. Both major presidential candidates have targeted reducing the growth of Medicare spending to GDP plus 0.5%. Guess who’s going to make up the difference? While it’s difficult to calculate the exact effect of each candidate’s plan, a Congressional Budget Office study estimated that a similar plan proposed earlier by vice presidential candidate Paul Ryan would increase the share of health care costs paid by Medicare beneficiaries from 49% to 61% by 2022, or about $6,400 a year per person. In addition, Romney has advocated raising the retirement age for Medicare, cutting Medicaid (which largely pays for long term care for retirees), and repealing Obamacare, which could lead to higher prescription drug costs for retirees and higher health insurance premiums for anyone retiring too early to qualify for Medicare. The good news is that if you’re eligible for a health savings account (HSA), you can use it to save for these future health care expenses tax free.

A troubled Social Security system. The Social Security trustees have estimated that starting in 2033, there will only be enough money in the Social Security Trust Fund to pay about 75% of projected benefits, meaning a 25% cut in benefits if nothing is done. Obama has suggested raising the cap on payroll taxes while Romney has suggested increasing the retirement age and reducing the growth in benefits for higher-income workers.

Each one of us must become more accountable for our own financial future. Relying on the federal government is a very high risk strategy.

Please comment or call to discuss how this affects you and your retirement plan.