Retirement Crisis: Poor Boomers on the Horizon

Retirement Crisis: Poor Boomers on the Horizon

Excerpt:

Americans do almost no thinking about what kind of retirement they want. They mistakenly assume that Social Security is a retirement program, when in fact it is a supplemental retirement program.

The three "stools" of retirement-Social Security, a pension, and private savings-have all seen some shrinkage in the past few years.

For Social Security, all baby boomers know the truth: We are going to be working longer, into our 70s, paying more and getting less. Pensions are going away: International Business Machines (IBM) stopped providing pensions to new employees a couple years ago, and many are facing reductions in their benefits.

And private savings? Let me quote from the EBRI survey: 57 report having less than $25,000 in household savings and investments (excluding their home and pension benefits). This is for all workers, so older workers would have more money, but other surveys show the results are equally paltry.

This is just the tip of the iceberg: American households are so strapped that only half could come up with $2,000 in cash if an unexpected need arose in the next month.

Comment: We are 2½ years away. A 401K might be better portrayed as "Private Savings". Our parents only had to rely on Pension (Kathee's Father from GE / mine from AT&T), social security, and private savings. The next generation will not likely have Pensions. One key, in my view, is to be debt free at the time of retirement. If one buys a house in his late 20's and then pays it off in 30 years, he will be Mortgage free by 60.

More:   Workers Saving Too Little to Retire

... pensions have become a much smaller component of Americans' retirement-savings mix over the years. The portion of private-sector U.S. workers covered only by so-called defined-benefit plans fell to 3% in 2011 from 28% in 1979, according to U.S. Department of Labor data compiled by EBRI.