Don’t be duped. This is a not-too-thinly veiled ploy to seek increases in Social Security entitlements and to limit the incentives written into the tax code to encourage private retirement plans, like IRAs and 401k’s.
The goal is to scare people nearing retirement into fearing for their future, feeling insecure that they will be left out on the street having to beg for a few coins to survive because their children won’t be able to (or interested in) helping them survive.
However, a Wall Street Journal article indicates that this narrative wildly overstates the facts. To wit:
- In 2013, the Organization for Economic Cooperation and Development (OECD) determined that the average American retiree has an income equivalent to 92% of the typical American income.
- Retirement incomes in the USA are the second highest in the world, in fact, 53% above the average OECD retirement income.
- In 2012, the median 67-year-old had an income that exceeded his average earnings during his career. That’s a higher standard of living than they did during their working years.
Contrary to the myth the mainstream media is touting, the average American born between 1966 and 1975 is likely to have a retirement income 110% of average working earnings (higher than the 109% level of those born during the Depression). Why? They will be investing more into IRAs and 401(k)s to fund retirement.
Don’t be fooled: Increasing Social Security benefits is not the answer. OECD data indicate that every addition of $1 dollar to Social Security benefits leads to 94 cents less income from savings or employment. The simple fact is that as Social Security benefits become increasingly generous, retirees tend to save and, hence, collect less income for other sources (e.g., work and savings).
Let the discussion begin…
To read the Wall Street Journal article, click on the following link:
"The Imaginary Retirement-Income Crisis."