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Letter: Why retirement savings are critical

Of the 401 Long Islanders surveyed by the

Of the 401 Long Islanders surveyed by the AARP, 28 percent said they do not feel confident that they will ever be able to retire. Photo Credit: iStock

Baby boomers, millennials and Gen-Xers who don’t pay attention to the Oct. 19 business article “Future shock” will be in for a very rude awakening when they retire. Several points really caught my attention.

First, people who are covered by traditional defined-benefit plans should pay close attention to their plans’ funding. Many plans are underfunded because of below-average stock market returns and puny bond yields. This will affect the plans’ ability to make promised payments.

Second, those who have not put together a budget are looking for trouble. While expenses such as commuting and apparel decline when you retire, others, such as medical costs and property taxes, usually increase. Creating a budget can identify unnecessary expenses that can be reallocated to retirement savings plan like a Roth IRA.

Third, those who are planning on Social Security funding the bulk of their retirement expenses kid themselves. The problems with the trust fund are well-documented, and in the current political environment, the notion of a bipartisan resolution seems highly remote.

Arthur M. Shatz, Oakland Gardens

Editor’s note: The writer was a corporate financial executive and administered pension and 401(k) plans.

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