Monday, July 19, 2010

The Retirement Nightmare: Half of Americans Have Less Than $2,000 Banked for Their Golden Years | Economy | AlterNet

I ran across this piece on alternet about the dire situation of prospective American retirees; half of Americans have less than 2000 USD saved for retirement (!); one-third of Americans have no savings at all. The author argues that this will have to be made up by saving (one source suggests one-quarter of one's income socked away) and by individual retirement accounts. Problem is what retirement analysts have been saying for years: IRAs are no substitute for workplace retirement plans. Why? Because with the former, all the contributions are made by the employee, whereas with the latter, the employer contributes a matching amount. The upshot is that, to make up for lack of employer contributions, people with IRAs have to put in double what people with workplace retirement accounts contribute to get the same amount of money in the end. Fact is, individuals cannot do it on their own unless they have incredible good fortune with their investments. This is not a good omen. Even if you are set up for retirement (and I know very few who are), what kind of economy are we going to have when half of the retired population is living solely on social security? And if Republicans have their way, even this program will get drastically scaled back. I don't see any other solution than a government fix.

The Retirement Nightmare: Half of Americans Have Less Than $2,000 Banked for Their Golden Years | Economy | AlterNet

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