We Are In Trouble: Part One of Our Special Five Part Series
As the presidential election season of 2012 has gotten underway, there is a massive issue that has gotten very little attention: how Americans will sustain themselves in retirement. In 2010, there were 40 million Americans over the age of 65. By 2030, that number is expected to rise to 70 million, which represents 20% of the total population. At the same time, we have moved from a workforce with traditional pensions to one in which each person chooses how much to save and how to invest that money.
Only 42% of American private-sector workers between ages 25 and 64 have any type of retirement plan in their current job. The majority of Americans (67%) who have access to a pension plan have only self-directed accounts such as 401(k)’s and similar accounts (such as 457(b) plans which cover those who work at non-profits or who are employed by the state or local government organizations). A large number of Americans also have IRAs. We refer to these types of retirement plans as Defined Contribution (DC) plans as opposed to Defined Benefit (DB) plans, the traditional pensions that used to be the norm. Continue reading