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From what I read, many if not the great majority, of HD readers are the exception to much of this dilemma.
The responsibility for retirement income has steadily shifted to individuals and away from employers (unless you work for government), but far too few workers have accepted that responsibility. Longterm thinking does not seem a widespread skill. I find this information a bit depressing. How do we change the situation?
Frankly I don’t know, but if we don’t make changes- if individuals don’t make changes in their financial behavior and if we don’t do better for those with inadequate means to fend for themselves, there will be adverse economic consequences as society continues to age. In my view anyway.
Hey, we need more Americans reading HumbleDollar and the reality it’s writers bring to personal finance. 🤑
Fact: most workers don’t stay with one employer long enough to get any value from a pension plan. The median job tenure is about 4 years, a bit longer in the public sector.
Fact: the peak for workers pensions in the private sector was about 50% in the 1970s. However, far less actually received a pension because they left the job before vesting or the receive a minimal deferred annuity at age 65 if they were vested. Today about 15% of private sector workers have a defined benefit pension, but short job tenure still means they most receive little value.
Fact: Today more workers have an employer-based retirement plan than ever before, just not a defined benefit pension. About 65–70% of private-sector workers have access to a retirement plan (401k and the like), the bad news, roughly 50–55% actually participate.
Fact: workers in their 50s have an average 401k balance of $246,700 – $270,000 and a median of $85,000 – $95,000.
Workers in their 60s have an average of $269,100 – $280,000 and median of $88,000 – $90,000.
Neither are going to provide much of a retirement.
Fact: 40% of retirees get 50% or more of their income from Social Security 15–20% of retirees rely on it for 90% or more of their income.
Unfortunately, for decades we haven’t been able to come to grips with changes necessary to keep Social Security sustainable.
I think, in the second paragraph, it should say “… but far too few workers have accepted that responsibility.”
Good point.
I’ve been thinking about this issue a lot while doing tax prep at Goodwill this year. We can talk all we want about saving, but I see people for whom that just isn’t possible. They earn far too little. And a lot of us, who have solid retirements, are benefitting from underpaid workers. Think health care aids for example. The agency that places them gets a high per dollar payment, but the worker winds up with appallingly little — and no benefits like health care or a retirement plan. NITHING! HI can whip through a tax return for these folks in a matter of minutes; there’s nothing to report,
i have no idea where this all finally ends up. I don’t like the quasi socialist answers to the current situation. But this afternoon, I Zelled some money to my daughter. She uses a dog walker, who is the sole support of her family of four. The woman’s husband is disabled, and she has to limit her income so he qualifies for Medicaid. The woman drives a beatup car to her dog gigs. I want my daughter to give the woman some extra cash each week— and it must be direct cash— to cover the rising gas costs. Maybe this is a guilt payment on my part, but I feel like I have to start somewhere.
For most of my life, as a responsible saver, I believed in allowing everyone to take on the responsibility for their own retirement. As much as I believe in free markets and free enterprise, I believe even more in reality and track records.
It appears, to my chagrin, that most of our fellow citizens simply cannot and will not save adequately for retirement and they would prefer a government program to do the saving for them.
If you put away $$$ early in your career in to the SP500 Index Fund over 40-50 years you will have enough. Might wanna open a Trump account for kids under 18; guarantees a very healthy and wealthy retirement fund as a traditional IRA
That’s not always the case.
The wealthy retirees are getting their money from……irresponsible people who spend every cent they can get their hands on. One man’s interest expense is another man’s interest income.
But here’s the thing: if you really do well, you will pay substantial taxes as a retiree. Your first duty is to support yourself, but if you do a good job at it you will be supporting many others as well.
So thanks for the money, you drunken sailors out there – now here’s some of it back.
How does that getting money from irresponsible people work?
Yes, everybody is subsidizing everybody else.
That’s the way a society functions. We may not like it, but it has always been the case.