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Pension funds have lost about 5 trillion dollars worldwide while 2008. And the disastrous losses do not stop at that estimate because the stock exchanges have started the year with further grave losses. The financial accident will have a serious impact on the way of life of the generations in an age of 50 years and older. The problems have to be differentiated between following main groups: the critical age near before retirement and the retirement age. The age near before retirement lasts from 50 to the statutory pension age between 58 and 65 years in most of the industrialised countries and the retirement age begins after the statutory retirement from work and the starting of pension payments.
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The risks for the people between 50 and retirement from work
This part of the people lives in an uncertain situation. Most of the pension funds have suffered serious losses. The liabilities exceed the assets of most of the pension funds. Thus pensions could be cut and be lower than imaginable in the future. This could supervene in a weaker purchasing power for the next generation that reaches the pension age within the next 10 to 15 years.
If the people have saved money besides the pension funds of their manager or if they do not have joined a corporate pension assurance and rely on other retirement schemes, they also have experienced losses on their assets in stocks, funds or real estate. It is difficult to catch up serious financial losses within a few years.
It makes matters worse if they lose their job a few years before reaching the pension age. They still are not eligible to receive a pension earnings and they have problem getting a new job in an advanced age. Some employers might provide them with a compulsory retirement but this kind of schemes all the time mean a shortage on pension payments.
These people even can lose their own homes if their earnings does not longer enable them to pay the mortgages on their real estate. The situation gets worse if they have to pay back interest rates and redemption rates on other debts.
How to cope with such a horrible prospect
There is no easy solution:
1. The best and uncomplicated way would be to invest about a quarter of the savings in gold. Gold seems to come to be a durable currency that can be converted in any paper currency if needed. There is no confidence in stock investments and there are doubts in the future value of the money. Many experts forecast inflation.
2. people need to be flexible and even to learn something new after many years of expert palpate in order to get an additional one job after they have been dismissed. This will be a very tough task, because jobs get very rare. people are in a favourable position, if they have acquired some practical skills and crafts. There is all the time a chance to get something to do for people who can mend machines and equipment, can do plumbing, are able to amend cloths, can cook for catering services or care for elderly people. Such jobs could help to gap the time until a person gets eligible to receive a national or corporate pension or both of them. The high time is over for bank clerks and speculation bankers. It is good to regain expert skills that can be applied on a collection of jobs than to stick to a extremely specialised profession that skills are of no use elsewhere.
3. Cash is king. people should use the chance to use all kinds of tax deferred saving schemes. There is a great option of such saving schemes that banks and assurance associates of western countries offer. And it is recommendable to save much higher amounts than tax exemption rules provide for. The more savings can be accumulated the better. people should start saving in a young age and intensify it after their children are grown up and educated.
4. saving money is good than purchasing a luxurious car that consumes much fuel and high maintenance costs.
5. Condition assurance is a proven prevention against poverty. Most of the European countries know compulsory Condition assurance systems. The American should grasp the chances of getting an farranging Condition assurance system.
6. Debts are a perilous poverty trap. people should budget their monthly consumption according to their income. They should restrain from using loans and overdrawing credit cards and bank accounts.
7. It is favourable to live in own property, whether a house or a condominium if affordable according to the regular income. It is recommendable to use savings for mortgage redemption in order to lower the liabilities before the pension age is reached.
How to cope with the financial accident after reaching the retirement age
Most of the above hints are valid for people who already have retired from work. Only few tips have to be added:
1. It is tough if the people still are compelled to work in order to earn their living because their pension earnings and savings are insufficient. Some legislation and pension fund rules allow a deferred retirement and subsequently a higher pension income. This chance to receive later a higher pension should be used if the labour store situation allows it. It is fine, if elderly people still can work voluntarily. Work also means to join the social live and to interact with the younger generation. It is, however, difficult to find a job for elderly people while masses of younger people line up in front of the labour offices.
2. Flexible people with some skills for crafts might still get paid by doing some work: e.g. whether helping farmers while the harvest season or doing some gardening for landlords. They could help wards at office buildings. They could help if others are on vacation. Baby sitting or pet sitting are also popular occupations in order to create some side income. More about how to make money can be read at Make Money Tip. The website also offers free tools for personal finance and a link to the best free online course about financial markets.
Liliane Waldner
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