Looming Retirement Crisis
March 11, 2014
The United States could be facing a retirement crisis similar to the housing market crisis, says MarketWatch.
Anyone can look at the state of retirement today -- tens of millions of baby boomers retiring combined with increasing longevity, too little savings and a threadbare public safety net -- and see that it is in trouble, yet Americans seem intent on ignoring it and hoping for the best.
Three new reports paint a frightening picture for the future.
- An analysis by Natixis, a money management firm, looked at a broad array of factors (from economic factors to health care) and found that the United States ranked 19th in the world for retirees, behind most other leading developed nations.
- The Boston College Center for Retirement Research updated its "National Retirement Risk Index," which seeks to assess how many people can expect to be financially comfortable in retirement. Half of the United States, according to the index, risks being unable to maintain their current standards of living in retirement.
- The Employee Benefits Research Institute (EBRI) recently found that 43 percent of baby boomers and those in Generation X are at risk of running out of money in retirement. For those in the poorest 25 percent, that figure rises to 83 percent. Moreover, EBRI used the most positive financial scenarios to calculate these figures. And an earlier survey by the institute found that 66 percent of American workers had saved less than $50,000 for retirement, while 28 percent had saved less than $1,000.
Natixis CEO John Hailer said of the issue, "Individuals need to be concerned about their own retirement needs, and not just be dependent on government and corporations." He noted that a full 89 percent of those surveyed told Natixis researchers that they were on track to reach their retirement goals, despite the fact that 54 percent of them did not even have a retirement plan, and 45 percent could not even articulate what those retirement goals might be.
Source: Brett Arends, "Our Next Big Crisis Will Be a Retirement Crisis," MarketWatch, March 3, 2014.
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