The following story from Barron’s magazine highlights how little folks are saving for their retirement. With one-two punch of the demise of the pension plans and the crisis of underfunding of the present pensions things are dark for the future. Now add a belief of social programs that cannot be paid for adding to the ever-increasing national debt, the hope of decades past that IRA’s and 401k’s would be the cure is now proven to have been a mirage.
Social Security was never designed to be a complete retirement safety net. Financial demands for our existing population are growing and not flat lining with policies ignoring future needs.
Tax and spend entitlement programs, increases in population through uncontrolled and unregulated entry of illegal immigrants adding to entitlement obligations, safety and security concerns, school and other infrastructure requirements, and what you see are the makings of a dark and dystopian future.
Americans are saving too little for retirement, No matter how you slice it. by Lewis Branham
If you read Fidelity Investments’ latest “Retirement Analysis” report, you’d think that the average American is doing OK when it comes to retirement savings.
Yet if you look at rival Vanguard Group’s annual “How America Saves” report, you might reach a different conclusion, even though it is analyzing similar data in 401(k) accounts.
Consider: According to Fidelity’s first-quarter numbers, “the average 401(k) balance rose to $103,700, an 8% increase from $95,600 in Q4 2018” while “the average IRA balance increased to $107,100, a 9% increase from last quarter.” Vanguard, in its more-detailed report that covers five million defined-contribution plan participants, states: “In 2018, the average account balance for Vanguard participants was $92,148; the median balance was $22,217.”
What gives? Shouldn’t the median, which is the midpoint between the largest and smallest accounts, be close to the average? The truth is the average account size, though it is often cited as an indicator of overall investor health, is misleading.
The statistic that should scare you is the MEDIAN balance of $22,217 which tells us that half the population is above and half below that number. Translation, there is a lot of people with higher retirement savings which distorts the average showing a lot of folks are below that median number.
When the crisis of retirement poverty hits, Social Security is next to nothing, industrial jobs replaced by robots, and fewer people can even change a sink washer, then the foundation of America’s hope and promise will have become a dream turned into a nightmare.