Draining 401k 2008-2013
My post in 2008 Draining 401k pool of money came to mind when I saw this Washington Post article in 2013…The trends have accelerated over the last four years, and as a general political and policy issue the lens is currently based on a pre-occupation with the federal budget deficits and austerity, the private side of savings appears to matter to people much less.
Fiscal trouble ahead for most future retirees:
For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly, according to a growing consensus of new research.
The Great Recession and the weak recovery darkened the retirement picture for significant numbers of Americans. And the full extent of the damage is only now being grasped by experts and policymakers.
Kenneth Thomas’s 2013 posts on retirement savings 66 trillion retirement saving shortfall and Solutions to middle class retirements.
What’s most bothersome about the data is that the crunch is going to hit the large number of baby boomers who will be retiring soon and over the coming decade. And there’s no quick fix on the horizon. Just the opposite: in negotiations over the 10-year budget, the GOP is insisting on cuts to “entitlements” (mostly money for seniors, like Social Security and Medicare and some of Medicaid). This would appear to belie repeated GOP promises not to slash benefits for people who are now over 55.
“…a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly,…”
Just a Great Recession? Are we sure this is not a depression function?
Given the importance of the subject matter in regards to the retirement financial stability of Americans, it is always good to get the point of view of established experts on the subject. As a part of a long series of email exchanges Dale was nice enough to provide me swith a link to a 2011 Senate Finance Committee hearing on the subject of “Deficit Reduction: Social Security”. At that hearing, according to a trranscript of the hearing testimony, Alex M. Brill, Research Fellow, American Enterprise Institute, made the following statement in his summation of his testimony.
“This Committee has enacted a variety of policies in the last decade to expand retirement savings through various defined contribution options. Such steps have strengthened our country’s “retirement security” in many regards. While I believe that still more can be done to promote retirement savings, it should be recognized that expanding and improving IRAs, 401(k)s, and the like are a complement to, not a substitute for, addressing the need for Social Security reform itself.”
http://www.finance.senate.gov/imo/media/doc/051011abtest.pdf
I am now secure in my reliance on my IRAs and 401k hearing those reassuring words from an “expert” who is a Research Fellow for no less an organization than AEI. So all the fuss regarding the failings of those contribution plans must be ill placed. Sit back and relax our retirment nest eggs are safe in the hands of Wall St. and the free markets.
Not the least of the lies told about the wonder of the IRA and 401k, was that they weren’t for everyone. For the working class and working poor, even if your employer offered one, if you live paycheck to paycheck, what are you going to put in it? (I know, we’ve all heard stories about the postman who saved up and donated millions to charity when he died, or the train conductor, or whomever, but they are very much the exception).
Both these “savings vehicles” were part of conservatives’ plan to help kill defined benefit pensions and were sold by Ronnie Raygun as “you will be in charge of YOUR money!”
I rescue and foster cats, and I am painfully aware that at today’s prices, even cat food isn’t an option for many seniors. Thankfully, I haven’t had to push anyone out of their bowl, yet.