2020's & 2030's The Twin Retirement Crises Decades!

5 signs you rely too much on Social Security

Bankrate.com finds that nearly half of Americans place virtually no money aside for the future, fewer than one in four save more than 10% of their incomes, and only one in seven workers save more than 15%. Actual dollar figures tell a more alarming narrative. The National Institute on Retirement Security (NIRS) reveals the median retirement account balance totals just $2,500 for all working age American households. For near-retirement households, the median account balance is only $14,500 — not even enough to replace one year's worth of expenses for many older adults.

 
DYI Comments:  The 2020's and 2030's will be the twin decades known as the retirement crises. Major changes will be coming.  My best guess is a national mandatory 401k type savings plan piggybacked onto Social Security.

Is It Time for Mandatory Savings Accounts?

The popular image of the good life in America and the prospect of a decent, financially secure retirement have become synonymous over the past half-century. Problem is, the evidence is overwhelming that America’s retirement savings system is broken. 

Take the private economy. Retirement savings are scant in 401(k)s, the main pension plan for private-sector workers. The typical value of a 401(k) and IRA for workers nearing retirement is about $120,000, according to the Federal Reserve. (That sum would provide $575 in monthly income (PDF), assuming a couple bought a joint-and-survivor annuity, calculates Alicia Munnell, director of the Center for Retirement Research at Boston College.) A survey by the Employee Benefit Research Institute (PDF), a Washington think tank, reports that 57 percent of workers who hold a 401(k) say the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.

 Meir Statman, a finance professor at Santa Clara University, recently joined the mandatory savings club. He looked at mandatory plans in other countries, as well as plans at many American universities. Among the highlights of his mandatory retirement savings proposal, Statman advocates a combined contribution by employers and employees at a minimum of 12 percent of earnings (drawn from the Australian example), 15 percent of earnings (common at many American universities), or 18.33 percent (the minimum in Israel). Companies already offering their employees a 401(k) could administer the plan since they have the infrastructure in place. A central agency would implement it for other employers. Fees would be razor-thin, copying Britain, which charges no more than 30 basis points for handling an account. (A basis point is one one-hundredth of a percent.) “Mandatory defined-contribution would constitute a second layer in a retirement savings pyramid, above a first layer of Social Security and below a third layer of voluntary savings,” writes Statman

DYI