With tens of millions of Baby Boomers scheduled to retire over the next two decades, an article in MarketWatch warns that the United States could be facing a retirement crisis that will be similar to the housing market crisis.
Why? Too many of those Baby Boomers have adopted a "Wizard of Oz" attitude...closing their eyes, clicking their heels three times, and hoping for the best. To wit:
- A money management firm, Natixis, has found that 89% of those surveyed say they are on track to meet their retirement goals. But, 54% of those surveyed didn't even have a retirement plan. Worse yet, 45% couldn't not even articulate what those retirement goals might be.
MarketWatch cites 3 reports. They paint a disturbing, if not frightening picture:
- Natixis examined a broad array of factors (from economic factors to health care). The finding: The United States currently ranks 19th in the world for retirees, behind most other leading developed nations. Add all of those Baby Boomers to the mix and the picture can't improve!
- The "National Retirement Risk Index"--which assesses how many people can expect to be financially comfortable in retirement--indicates that 50% of people in the United States risk not being able to maintain their current standards of living in retirement. Those Baby Boomers are going to have to do a lot of cutting back. That's sure to make for a happier retirement!
- The Employee Benefits Research Institute found that 43% of Baby Boomers and Generation X'ers are at risk of running out of money in retirement. For those in the poorest 25%, 83% will run out of money. 66% of American workers had saved less than $50k for retirement, while 28% have saved less than $1k. That's not enough money saved to retire for 1 year!
Financial planners with whom The Motley Monk has spoken over the years have suggested that an individual who is planning to retire at age 70 and wants to maintain a comfortable lifestyle ($80k-$100k in income) for a minimum of 15 years needs a minimum of $1.2M in retirement savings. This figure allows for minimal draw down on principal, meaning a retiree could withdraw more each year with the understanding that over the course of those 15 years, there'd be less savings. What happens if that retiree lives for 20 or 25 or even 30 years? The draw down on principal could have been an error in sound financial judgment.
So, where are all of those people--as retirees--going to turn when they run out of $$$? Family? Friends? Neighbors?
Likely not, The Motley Monk thinks. They will turn to the federal government to provide for their needs. And the Deomcrats know it. Obamacare is just a first volley in its intergenerational vote gathering effort.
It's almost time to crank up the organ grinder: "Happy days are here again! Those happy days are here again!"
Let the discussion begin...
To read the MarketWatch article, click on the following link:
"Our Next Big Crisis Will Be a Retirement Crisis."