The financial media is chock full of stories these days about the looming retirement savings crisis.
Americans are living longer and their savings may not be adequate, the pessimists contend.
On top of that, there are serious concerns about the future solvency of the US Social Security system and the Medicare health care program for the elderly.
The Challenge
There is a case to be made that US faces some tough policy questions ahead.
Traditional pensions have been vanishing for years.
Moreover, the average balance for 401(k) plans for households nearing retirement is all of $111,000, according to Alicia Munnell, director of Boston College’s Center for Retirement Research.
Coverage Crisis
Also, a big chunk of the workforce doesn’t have access to employer-sponsored retirement programs.
According to the U.S. Labor Department, only about 70 percent of American employees have access to an employer-provided retirement plan.
And of that group, only some enroll. Viewed more broadly that means only 54% of American workers even have employer-provided retirement accounts.
Only 77 percent of these employees enroll, sometimes due to eligibility barriers. As a result, only 54 percent of all American employees have employer-provided retirement accounts.
Optimistic View
Other scholars such as Andrew Biggs, resident scholar at the nonprofit American Enterprise Institute, argues American retirees aren’t experiencing financial distress.
Biggs points out that American seniors have the lowest poverty rates in the population. He also cites Gallup polling data showing that three-quarters of retirees say they have enough to live comfortably.
As he told the Wall Street Journal recently:
“In addition, more working-age Americans are saving for retirement than in the past. While people are wistful for traditional pensions, never more than 40% of workers ever had one. Today, the Social Security Administration finds that 61% of all workers, and 80% of married couples, are saving in a retirement plan. Most households who should be saving for retirement are saving.”
Takeaway
If you’re worried about the health of your retirement savings, in my opinion, it is best to consult with a trusted financial adviser.
While the debate rages on about the American retirement savings crisis, you can at least getting your own house in order as you prepare for the golden years ahead.
Photo Credit: Richard Walker via Flickr Creative Commons
