Financing retirement in America
Like most boomers, I’m retired. My retirement is funded by (a) a 403b defined contribution plan, (b) Social Security and (c) personal savings. I waited until age 70 for SS benefits, to max those out. Not everyone is so fortunate.
“How’s this for a somber retirement forecast: The typical American worker has less than $1,000 saved for retirement, according to a new report from the National Institute on Retirement Security (NIRS).”
OK, but that covers all workers, age 21-65. Of course, a 21-year-old won’t have saved as much as a 65-year-old. By the time I finished grad school at age 27, I had more than $1000 saved, between a 403b and personal savings, and that’s in nominal dollars, not inflation-corrected. Of course, I didn’t own a car until I was 26 and didn’t buy my first home until I was 32. But this isn’t about me.
“In Fidelity’s 26,000 defined-contribution plans at companies across the country, covering 24.8 million participants, account balances last year clocked in at record highs, with an average 401(k) balance of $144,400 and an average IRA account balance of $137,902.
“For these folks, the average 401(k) savings rate was 9.5%, and the average employer contribution rate was 4.7%, bringing the combined employee and employer 401(k) contributions to a record high of 14.2%. Fidelity’s suggested savings rate is 15%.
“The NIRS snapshot of US workers, however, is grimmer. The typical employee contribution rate is between 5% and 6%, and the typical employer contribution rate is just under 3%.”
So regardless of your employment situation, start saving for retirement ASAP. The earlier you start, even with a little bit, the less painful it is.
But what about Social Security? SS was never intended as a sole source retirement plan. SS was meant to keep you from having to live under a bridge eating cat food.
“Many workers are not confident Social Security will be there for them when they need it, the NIRS researchers found. They figure either Social Security will go belly up before they’re eligible to claim benefits or the benefits will be slashed.”
OK, this is just bullshit. If nothing is done before the trust fund is exhausted, SS will still pay 77% of projected benefits. SS cannot go bankrupt as long as there are workers in America. Still:
“For about half of seniors, monthly Social Security benefits provide at least 50% of their income, and for about one in four seniors, it provides at least 90% of their income.”
Statistically, a large fraction of vulnerable retirees are GOP voters. The GOP isn’t interested in bailing out struggling retirees. How to convince those folks to stop supporting a party that doesn’t care about them?
America faces a retirement crisis
It’s hard to convince Republicans. They all assume that they are special and that somehow the rules will bend in their favor. Believing this, they particularly enjoy the feeling that others, less deserving, will have to endure the consequences of those rules. It’s very hard to fight a belief system like this. Those trapped by the rules they supported tend to argue that they are victims of extreme injustice and that members of various out-groups are the ones getting special treatment. In a sense, that further justifies to them the imposition of the rules on others.
it’s worse than that. NO one is doing a damn thing to save Social Security. It could be saved by raising the payroll tax two tenths of one percent per year for ten years. That is saved forever. The Chief Actuary knows this. But no one in Congress or the Senate will admit it. And neither will the reporters and commentators who cover them.
And that even includes certain organizations that claim to be supporting SS.
And all the politicians lie about it being a driver of the National Debt. It isn’t. But they say it is, with their fingers crossed, because they are making the unlikely assumption that the Treasury will take over paying for benefits after the Trust Fund runs out of money…if Trump doesn’t destroy it by main force before then.
Now, who here is going to do something about it?