It's only a short stroll, then, to some grim, newly published data showing many of the folks near retirement have little savings beyond Social Security.
The Schwartz Center for Economic Policy Analysis writes:
Despite the growing tax breaks and intensive advertising campaigns for retirement accounts ‐‐ most of which are 401(k) plans and Individual Retirement Accounts (IRA) ‐‐ Americans ages 50‐64, 58 million of them in 2010, will likely not have enough retirement assets to maintain their standard of living when they reach their mid‐sixties. The addition of a weakening labor market for older workers means we are headed for a retirement income security crisis. Three quarters of near retirees (ages 50 to 64) have annual incomes below $52,201, with an average total retirement account balance of $26,3952.The data's led one New School researcher to conclude the system of voluntary retirement accounts has been a disaster.
Individuals with incomes over $52,201 per year have more in their retirement accounts, but their balances are not high. Their average retirement account balance for this income group is $105,012.
Teresa Ghilarducci argues for "guaranteed retirement accounts on top of Social Security. These accounts would be required, professionally managed, come with a guaranteed rate of return and pay out annuities."
Her essay doesn't provide detail on how the accounts would be administered or how the money would be spent. And, of course, Americans don't like being told what to do.
"You don't like mandates? Get real," she says. "Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster."
-- Paul Tosto
(h/t Carpe Diem blog)
Am I to understand that the same generation that likes to tsk-tsk the younger for treating their house as an investment vs. just-a-home hasn't properly saved for their retirement. Shocking.
"Get real" is more than a little misleading here.
It may be "real" that many people can't be trusted to make long-term financial decisions, and so will cost us all in the end by needing to fall back on social safety nets, exploiting the inability of hospitals to turn away ER patients, etc.
It may be "real" that the consequence of this is that it's cheaper for us all to chip in for mandatory retirement accounts.
But it's also "real" that if something isn't palatable to voters and politicians, it's just not going to happen. Most of us really like to do what we want with our money, even if that's waste it on stupid stuff.
So rather than just telling people to "get real," I'd like to see suggestions on how to convince people that this really is the way to go. Assuming that it is the way to go in the first place.