America’s Retirement Crisis: Drawing the Short Straw
Here’s a slap compliments of the defined contribution retirement system that we have in place in this country that isn’t working.
Pensions, the way our parents and their parents survived in retirement, are no longer available. Very few companies offer them.
They were replaced by IRAs and 401(k)s, which require the average person to finance and manage their own retirements. We were and are still being asked to do this with virtually no training in money management or investing.
I’ve ranted about the shortcomings in our education system and the failures of the money business to address this nightmare so many times that even I’m sick of hearing about it.
I’m sorry to be so blunt, but after almost 30 years of working with the average investor, I am confident when I say that the average person has no business managing their own retirement accounts.
So we shouldn’t be surprised that a huge number of boomers are entering retirement with little or no savings and are carrying too much debt as well.
I have to ask: How the hell is this supposed to work?
Fear not: The answer being offered is to work as long as you can, and that has crystalized into the idea that 70 is the new retirement age.
Yes, the experts pushing this agenda are half right: We do get a lot more from Social Security if we wait until age 70. Around $3,500 a month is the maximum, but the average check this year is $1,404.
We can contribute more and longer to our savings – which we haven’t done to date – but somehow that is supposed to change now that we’re older than 62 or 65.
Of course, the longer we work, the more we contribute to Social Security, and you know how well that’s been managed.
But here are the real facts about boomers and retirement:
- The average boomer is retiring at 62, not 70.
- Forty percent of people report they want to work until age 70, but only 4% do.
I haven’t seen any numbers that convince me that those who work until 70 save one penny more than they did before. Most are in the work-to-survive mode.
So here we are, not even halfway through the huge boomer migration to retirement, and every problem I wrote about 10 years ago is still with us. Not one thing has changed.
The fixes aren’t difficult to understand. In fact, they’re quite easy on a practical level, but they’re obviously impossible on the political level.
The people who have the power to make the changes needed either don’t understand the problems we face or don’t care.
I’ll let you decide which.