The Scary Reality of Americans' Retirement SavingsIt’s not exactly news that Americans’ overall retirement savings are greatly amiss. But the actual magnitude of that disconnect between what we know we’re supposed to save and how much we’re actually putting away is shocking.
A new study by the National Institute on Retirement Security spells out this shortfall in scary-low numbers, and finds that with the median retirement account at a mere $3,000, the average American working family has virtually zero retirement savings
Those nearing retirement are no better off. When the study focused on just the demographic approaching that benchmark (people age 55 to 64), they found that less than 5% had savings that were on track to meet standard targets. All in all, the report calculates that the national savings gap could tally up to $14 trillion.
What Does This Mean for the Future?
The study pinpoints the savings shortage on more than just the recent economic crisis, also noting that only half of private employees today are offered retirement benefits through their employer—that’s the lowest it’s been since 1979, and is likely compounding the problem.
Without some improvement, the study suggests that the country is setting itself up for heavy dependence on public assistance, younger generations and social service organizations to help with the future retirement burden. “The ‘American Dream’ of retiring after a lifetime of work will be long delayed, if not impossible, for many,” according to the report. Perhaps this could be a wake-up call to save more for retirement.
U.S. Ranks 19th in Retirement SecurityThe United States may have placed second at the Winter Olympics, but when it comes to retirement, America isn’t winning any medals.
In fact, a new report by Natixis Global Asset Management finds that the U.S. ranks a paltry 19th place in retirement security across the globe. That means that the nation falls far behind many other developed countries—like Germany, Canada, Iceland and Korea.
While we’ve reported before on the scary reality of Americans’ retirement savings, The Global Retirement Index is based on more than just money; the ranking takes into account a number of qualities that affect citizen’s golden years, including health care, finances, material well-being and general quality of life.
So what’s dragging the U.S. down? As CNNMoney notes, high-ranking countries like Switzerland, which came in first overall, support strong pension systems—while in the U.S., you’re largely on your own when it comes to socking away enough funds for retirement. And while countries like Austria, which placed third in the report, have first-rate universal health care systems, many U.S. retirees still struggle with steep health care costs.
“The responsibility for financial security in retirement is falling even more heavily on individuals than ever before,” John T. Hailer, C.E.O. of Natixis Global Asset Management in the Americas and Asia said in a press release. “It is becoming increasingly apparent that to ensure financial security in retirement, individuals need to set personal goals and view planning and saving for retirement as a serious, conscious and strategic pursuit.”
WASHINGTON — The federal budget deficit fell precipitously to $680 billion in the 2013 fiscal year from about $1.1 trillion the year before, the Treasury Department said Thursday. That is the smallest deficit since 2008, and marks the end of a five-year stretch when the country’s fiscal gap came in at more than a trillion dollars a year.
The report comes days before the White House is expected to release a new budget.
Democrats have said that the still-tepid recovery requires government investment along with commitments to reduce deficits in the long term — while also emphasizing the rapidly falling budget gap.
Republicans have long said that Democrats have proven poor stewards of the economy, overseeing a period of sluggish growth and rising debt.
The report, which was a regular update on the country’s finances, underscores the persistence, if not the strength, of the recovery after the worst economic downturn since the Great Depression. Growth in tax revenue accounts for much of the decline in the deficit. But increases in taxes and cuts in federal spending figure strongly too, as does a surprising — and surprisingly long — slowdown in the pace of health-spending growth.
The Treasury said that revenue climbed $324 billion to $2.8 trillion between 2012 and 2013. That is growth of around 12.9 percent, reflecting both higher income rates, including higher top marginal rates and the expiration of the payroll tax holiday, and a strengthening economy.
At the same time, government spending grew relatively slowly, to $3.9 trillion from $3.8 trillion a year earlier, the Treasury said.
“Thanks to the tenacity of the American people and the determination of the private sector we are moving in the right direction,” said Treasury Secretary Jacob J. Lew in the report. “The United States has recovered faster than any other advanced economy, and our deficit today is less than half of what it was when President Obama first took office.”
The debt is not a very big issue in the short term. But it is a fairly massive issue in the long term, because of Social Security and Medicare. I cautiously support raising the retirement age to deal with that, but that's from the perspective of a 21-year-old who presently looks at the idea of retirement with disgust.
??
Why disgust?
Most of our financial planning is cantered around early retirement.
Yeah, exactly. digitize, I really do think your view is that of somebody who is a bit young.
This idea that we should take pride in working until we drop dead is really bizarre. I've done not 60 hours but 80-100 a week and you could see that as very productive, whereas looking back on it I see it as very unhealthy.
Nobody lies on their death bed and says "I wish I had spent more time at the office." Take a look at all the research about the regrets that dying people have and it becomes pretty clear.
We are healthier and live longer. You can transition into partial retirement. You can consult. You can travel the world, train to run a 10K, etc. Not going to just die down in some minimum security Floridian prison.
Disgust is probably too strong of a word. But I am a young person who enjoys being productive, and, at this point in my life, it's hard for me to imagine giving that up unless forced. My attitude is likely to change (probably once I'm out of college and working 60+ hours per week). But I'm probably less empathetic towards those who wish to retire than I should be.
it stresses the importance of retirement planning, and it also stresses the importance of a government program like social security that create a floor of living standards for the elderly.
most people don't have the time or knowledge to effectively financially plan for themselves, let alone manage a stock portfolio over 30 years. it's also very difficult to get people to save for the future when the present seems so pressing. social security does both for you, and doesn't risk destroying your savings should another 2008 happen again.
it stresses the importance of retirement planning, and it also stresses the importance of a government program like social security that create a floor of living standards for the elderly.
most people don't have the time or knowledge to effectively financially plan for themselves, let alone manage a stock portfolio over 30 years.
it's also very difficult to get people to save for the future when the present seems so pressing.
social security does both for you, and doesn't risk destroying your savings should another 2008 happen again.
It also, and due to demographics will increasingly, transfer income from young families raising kids and paying mortgages to retired grandpa and grandma on the golf courses of Arizona. Think people might better prepare for retirement if they had 12.4% (soc sec tax rate) of their income back?
You might be a liberal if... you think people are too lazy/stupid to attend to their own lives. Plan their retirement, buy health insurance, secure a picture ID to vote, or get through life without a government program to lead you by the hand.
5 years after the recession and we're saying this?
2008 will look like a $20 bounced check compared to the collapse of the U.S. economy.
You might be a conservative if you think the only explanation for anything negative is laziness or stupidity. And maybe not, say, being really busy because you're working multiple jobs for shit pay.You might be a liberal if... you think people are too lazy/stupid to attend to their own lives. Plan their retirement, buy health insurance, secure a picture ID to vote, or get through life without a government program to lead you by the hand.
i'm glad you're a big fan of immigration as well! the best way to be able to pay for an aging society is a constant influx of young, hungry immigrants ready to work and have families. hopefully, you can convince some in your party not to fear people who might be different from them and embrace immigration reform.
I'm very strongly pro-immigration, but it's impossible to permanently base funding entitlement programs off of a steady stream of immigrants.
The math always catches up to a Ponzi scheme.
Sorry, I just can't resist.
If you can fund it (not that they are, but that they can), it's not a Ponzi scheme.
If you don't like it only because decades of cynical politics has somehow convinced you that it's a bad thing, then it's a "Ponzi Scheme". Although that makes no sense, but why would it need to make any sense?
It's nothing more than a 'good line' to use in a bullshit partisan argument. That's why the political hack that came up with it started using it in the place. It doesn't have to make sense, it just has to be a good barb.
I read that if we'd just raise the cap on the SS tax, it would comfortably solve the problem. Hell, it's so easy, you know it will never happen.
Of course, higher and higher taxes. It's so easy.
It spends more than it receives in revenue.
There is only an IOU in the Social Security "lockbox."
The unfunded liability of Soc sec is $10 trillion.
Run a pension plan like that in the private sector and you'd be in jail.
And Europe faces the same demographic problem of funding its Welfare state.
Of course, higher and higher taxes. It's so easy.
We've had one federal tax increase in the last 20 years. And that just happened recently and it only affected people making nearly half-a-million dollars a year. We can survive another increase on the SS tax cap.
Such an increase would only apply to people making well above 100K a year. And no, it's not fair that they'd have to pay more. But many kids born into poverty have almost no chance of ever getting out of it. It's possible, but it's extremely difficult and the odds are against it. Is that fair? No.
So, as I've heard my whole life, growing up in Red State America, surrounded by fiscal conservatives that believe in personal responsibility. "Life's not fair. Get over it."
I'm pretty much still a fiscal conservative in principle, I just can't ignore the realities. And I believe very strongly in Social Security as a necessity.
I also believe in paying that bill. How else would you do it?
Do you want to get rid of Social Security? Tell us how you'd fix the problem.