This week the National Institute on Retirement Security released a report showing that 90 percent of working-age households aren’t saving enough for retirement. About 45 percent have nothing saved. The result is a retirement savings gap between $6.8 trillion and $14 trillion. For those near retirement, the median retirement account balance is $12,000, and for all households it totals $3,000.
The findings confirm that the American Dream of retiring comfortably after a lifetime of work will be impossible for many. Based on 401(k)–type account and IRA balances alone, some 92 percent of working households do not meet conservative retirement savings targets for their age and income. Even when counting their entire net worth, 65 percent still fall short.
This is not exactly new-news. The baby boomers were the first generation to be forced into 401(k)s instead of pensions, and all too often they were given little schooling about the mechanics or stakes of this dramatic change. The new benefits were hostage to the stock market and the participants were completely on their own. Company matching contributions became more rare. In addition, changes in the economy such as globalization and the decimation of unions left huge portions of the workforce without any job-related retirement benefits at all, even as overall wages were stagnating. Much wealth was lost in the housing crash. This squeeze is worse for younger workers facing lower wages and high college debt. To make matter worse, politicians keep wanting to cut “entitlements,” including Social Security that is essential to senior citizens (it would be better to call them what they are: Earned benefits). And if we’re expected to work until we die, there have to be jobs and employers willing to hire older workers.
In a heavily unequal America, the top 20 percent or so will do fine. What about you? (Honor system: Answer if you are not retired already, having benefited from the middle class at its zenith).
Read on for some of the important stories you might have missed.
This Week’s Links:
• The hidden costs of a price-tag society | The Atlantic
• How are these times different? | Paul Krugman
• Bernanke kills Fed credibility and confidence fairy with one shot | Naked Capitalism
• States giving billions in ‘megadeals’ to U.S. employers | USA Today
• How the American university was killed, in five easy steps | The Homeless Adjunct
• Goldman Sachs concedes existence of too big to fail | Baseline Scenario
• Technology and job destruction | Conversable Economist
• The biggest scandal in America | Washington Post
Today’s Econ Haiku:
Wall Street and Beijing
Eating your 401(k)
What an appetite