Americans are facing a multifaceted retirement crisis. Fewer companies are offering defined pension plans. Many of those who still do, including government employers, are facing deficits requiring them to change their policies. And too many workers themselves are not saving enough to see them through their golden years.
Add to this the fact that people are living much longer than in the past and it's clear the nation may soon face a situation in which many of its senior citizens must continue working or end up destitute, unable to care for themselves.
A report in today's Deseret News outlines the problem well. Studies show that more than half of all Americans do not even have a savings plan in place for retirement. Those who do save, however, range widely from ones with a lot of savings to those with little, according to the Economic Policy Institute.
Add to this an IRS report released this month that shows people saved 6 percent less for retirement in 2010 than they did in 2008; people were putting away less into 401(k) plans; and young workers, those in their 20s, were hardly saving at all.
There are a variety of reasons for this seeming lack of personal discipline. Figures measuring habits between 2008 and 2010 must take the recession into account, with its devastating after-effects. Many Americans claim they are too busy trying to meet daily expenses to save anything. Some feel squeezed by rising health care costs, a factor that also looms as an old-age crisis on the horizon. Many have had to endure long stretches of unemployment or now work part-time.
But a lack of private savings makes stingier employment plans all the more painful.
And perhaps the biggest threat on the horizon is an approaching Social Security crisis resulting from the strain millions of baby boom generation retirees will put on available funds.
Solutions exist, but political will is in short supply. Some, like Forbes contributor and Next Avenue web editor Richard Eisenberg, point to Australia as perhaps holding some answers.
In the 1980s, Australia faced a crisis similar to what the United States is experiencing today. It set up a system in which nearly all employers are required by law to contribute to retirement savings accounts for their employees, equal to 9.25 percent of earnings.
Also, as Eisenberg notes, upon retirement Australians receive a pension from the government, which ranges up to $28,000 per year and becomes less for people who have large incomes or assets.
Americans aren't likely to take to the idea of mandatory savings plans, especially as these equate to smaller take-home salaries. They value the freedom to make personal decisions with their money. Nor are they likely to embrace the idea of means-testing Social Security benefits. Despite court rulings that define Social Security contributions as taxes, many people feel entitled to receive an amount based on what they have put in.
However flawed, Australia's system at least leaves many of its retirees in substantially better shape than an American who may enter retirement with a gold watch, a meager monthly Social Security and little else.
In an ideal situation, families would mitigate much of the problem by caring for their own. Indeed, the looming crisis may lead to closer ties among familial generations. But a nation with a growing population of destitute senior citizens inevitably will face public expenditures to fix a variety of problems.
It is inexcusable for U.S. lawmakers to continue to treat Social Security as if all is well and no changes are needed. The same can be said for Medicare and, eventually, for the burdensome costs associated with the full implementation of the Affordable Care Act. Deficit spending is not a long-term strategy.
Meanwhile, U.S. workers should get used to the idea of taking matters into their own hands, setting up retirement savings accounts and preparing for old age long before it comes.
Many workers postpone retirement simply because they enjoy working. If they are healthy and able to do so, that is wonderful. But living hand-to-mouth in old age because of poor planning is a tragedy.
Multiplied millions of times, it becomes a national crisis.
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