In the U.S., the average couple approaching retirement (ages 56 to 64) has saved $134,000, while single individuals have an average of $47,000, according to a report from the Federal Reserve published in 2016.
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However, many financial experts suggest that this amount is grossly inadequate for an estimated 45% of retirees who will run out of savings before age 75.
The reasons for this deficit are varied, but one common denominator is the amount of risk and uncertainty associated with today’s volatile financial markets.
As much as people can apply this statement to retirees across the board – both rich and poor – it is especially poignant for low-income households, who depend more on this vital lifeline than those living at or above the poverty line.
The same Federal Reserve report found that more than half of non-retired households with financial assets less than $10,000 felt they didn’t have enough money to last throughout retirement.
Retirement crises are not confined to developing countries but are present in developed nations.
Blockchain and bitcoin are the only potential solutions to this global crisis; let’s discuss how.
Current Challenges:
Though many point out the lack of adequate savings as the root cause of financial insecurity among retirees, there are other factors that people should not overlook.
Of these factors, none is as important as the risk associated with a lack of diversification within one’s savings portfolio.
In 2015, it was reported by people that roughly a third of American households owned stocks through a 401(k) or traditional IRA – an astounding figure when you consider that these accounts represent only about 0.1% of all U.S. households, according to a report from the Investment Company Institute.
According to the same report, roughly 14% of U.S. households owned individual stocks and another 18% owned mutual funds.
However, this is an improvement from 2009 when fewer than 10% of U.S. households invested in stocks – the lowest figure since 1964 – it still falls short of solving two main challenges associated with retirement: risk and uncertainty.
Especially for low-income households that are more dependent on savings accounts and other predictable means of income, having a high concentration in one asset class can be extremely risky should an emergency arise or if you want to achieve greater returns on your savings to make up for a lost time – especially when you consider that 65% of U.S.
Blockchain to the Rescue:
With financial security and the preservation of capital as a top priority, individuals and businesses are becoming increasingly proactive in seeking solutions that can help save money while avoiding the potholes of uncertainty.
The solution to this problem lies in the hands of blockchain technology, which is revolutionizing finance through its ability to provide transparency, security and trust – all critical components to a successful investment.
The advantages associated with Blockchain are numerous, but perhaps its most significant advantage is that it allows people to control their financial future. For example:
- An individual could transfer a portion of their savings into a retirement account – possibly even an IRA or 401(k) account – via one digital transaction.
- A business could issue their employees with a private digital cryptocurrency, which would be recorded on a digital ledger and effectively provide them with a path to financial independence.
- By recording this transaction on the Blockchain, it would serve as proof of ownership and could be used in legal disputes. The bank then recorded these transactions via its internal blockchain platform. The bank and the insurance company could then access the blockchain platform to retrieve information on the user’s transactions.
- If users wanted to send their funds to another individual in another country, they could do this instantly with little or no fee.
- The cost-effective digital payment system could potentially elevate an individual’s purchasing power and allow them to afford health care or other necessities better.
The Bottom Line:
With these benefits in mind, it should be clear that blockchain technology is poised to revolutionize how people interact with their money – especially if it is adopted as a global standard for monetary transactions.
As a result, it is possible for anyone who uses practically any kind of money – from fiat currency like the U.S.
The only question that remains is whether or not we will see a shift in the current paradigm. The future of this technology, like all that came before it, will be determined by how society implements it.
Will we continue using the same financial models and processes that have failed before?
It is unlikely; however, if history indicates, humans are creatures of habit – especially regarding our savings.
It will take time for society’s mindset to change; however, it can happen with proper education and exposure.
Once people become aware of how blockchain technology operates and how these digital assets can provide them with an opportunity to maximize their savings potential, we could see a swift change in global investment patterns.