The Truth About the Retirement Crisis

Many people believe that America is in a “retirement crisis.” They feel that, with so many baby boomers reaching retirement age and so few of them actually read for retirement, we’re in for trouble.

 

Of course, not everyone agrees with this fear. Take liberal Kevin Drum, for example. The researcher and financial guru says that there’s no evidence for a retirement crisis. In fact, he even went so far as to suggest that, thanks to the use of 401(k) accounts and other retirement accounts instead of traditional pensions, people who are soon to retire will fare better, financially speaking, than usual.

Despite the claims of Drum and the many who agreed with his logic, the facts just don’t fall in his favor. Research shows that, while effective in some ways, 401(k) plans and individual retirement accounts aren’t as beneficial as traditional pensions, and sadly, these non-pension plans are what a lot of soon-to-be-retirees are banking on.

Another problem is that for most of the 65 and over crowd, a huge part of their income comes from working, so when you take working out of the equation in retirement, these people are often faced with a drastically reduced standard of living during retirement.

Other concerns for retirees include the following:

- Recent cuts to social security income allotments

-  Low interest rates, which equals low investment returns

- A decrease in the availability of defined-benefit pensions

-  Longer lifespans, meaning a need for more funding during retirement

It’s easy to see that there are some serious concerns about retirement and what it will be like for the generations to come. Right now, people just have to plan as carefully as they possibly can and save as much as they can. While many hope that, one day, there will be more and better plans in place to provide for retirees, without them having to do all the work of scrimping and saving, that hasn’t quite happened yet, so the responsibility, fair or not, does fall on the individual.