My conclusion is simple and straightforward about what needs to happen throughout our great country. And that is this.
It's imperative that we the people become more knowledgeable about our financial affairs, both individually and as informed citizens, since we're now in a 401k world with an underfunded social security system. Meanwhile, our country goes deeper into debt each day.
Stated simply, basic financial knowledge is an essential ingredient for our individual and collective "self defense." It's absolutely essential to ensuring a prosperous future for an America made up of well informed and self governing citizens.
Today this need for knowledge is more true than ever with all the "ignorant but loud" presidential political rhetoric about fighting for the middle class, making millionaires and billionaires pay their fair share in taxes, government "investments," balanced budgets, fiscal responsibility, entitlement spending, education spending, taxing the rich and so on.
The laundry list of empty platitudes is lengthy and apparently endless. Where will we get the money to do all this? I sure don't have an easy answer for that question.
Only if we the people become more knowledgeable about the economic and financial basics will our political "public servants" feel compelled to stop treating us like gullible ignorant children.
The more that more of us take the time to learn more about basic economics and financial matters, the better off we'll all be, personally and as a country. That's just a fact.
But now let's get me off the soap box and return to the topic du jour-- individual retirement planning and preparedness.
Retirement in America is 'endangered' is primarily concerned with planning and providing for one's retirement needs. That said, it's quite revealing in several other aspects as well.
We'll quote a few excerpts from the article:
(1) Contribution rates
"On average, workers — at least those who have such a plan — contribute about 7% of their compensation into their 401(k) plan and that, many experts say, is too low. According to Reynolds (CEO of Putnam Investments), one would need to save at least 10% to replace, when combined with Social Security benefits, 80% of one’s final pay in retirement. Others say contribution rates have to be even higher the longer one waits to save and the less one has socked away.
Maybe the time has come to put in place plans that would automatically escalate the amount one contributes to a 401(k) to a minimum of 10%, not just the 3% which is the norm."
(2) Coverage
"Another issue plaguing the U.S. today is this: Just half of the 150 million or so working Americans have an employer-sponsored retirement plan at work. And the 75 million workers who don’t have a retirement plan at work aren’t saving anything at all for their golden years. But studies suggest that those workers might save if they did have a plan at work."(3) Financial Literacy and Confidence
"Sometime in March, the Employee Benefit Research Institute will release the 22nd annual Retirement Confidence Survey and it likely will show that only a few Americans are very confident about having enough money for retirement. In 2011, just 13% were very confident.
Reynolds suggests that there’s a correlation between financial literacy and confidence. To solve the confidence problem, we must solve the literacy problem. According to Reynolds, it’s time to provide the education and tools required to help people understand how much to save and how to invest, how much they will need to accumulate for retirement, and how to make their money last a lifetime once in retirement. Knowledge will lead to action, and action will lead to confidence.
Others agree. “Financial literacy and awareness are key components in helping Americans prepare for retirement,” said Suzanna de Baca, the vice president of wealth strategies at Ameriprise Financial. “Any American looking ahead to retirement can benefit from a written financial plan that will help them define their retirement goals and objectives, and guide them in creating a realistic plan to create a more confident financial future.”"
(4) The good news — sort of
“As more and more baby boomers retire, the discussion on retirement, on retirement income, will become a national topic,” said Reynolds. “And I think it will spark the interest of retirement to all age groups.”
Let’s hope that’s the case because the problem is real. “America is facing an unprecedented retirement challenge as the U.S. population undergoes a radical demographic shift,” said Michael Falcon, head of retirement at J.P. Morgan Asset Management. “Twenty percent of the population will be over 65 years old by 2020 and, despite impressive aggregate asset growth, many Americans are still significantly short of the savings they will need for a dignified retirement and are unprepared for the complex financial choices they will need to make.”"In addition to retirement, I'll add that in lots of other matters too many Americans are unprepared to make informed financial decisions about what we want to retain as our individual private responsibility and what we want our government (aka fellow citizens) to do for us.
If we create a growing dependence on others to provide enough money or to tell us how they'll make sure that we will be able to live comfortably in retirement, we're in serious trouble.
We need to assume responsibility to take care of our own needs, and that includes making sound financial decisions about our future needs, both personally and as citizens in a self governing society.
In other words, can we properly depend on our company or government officials to do the right things and make the right financial decisions for us prior to our retirement? Should we blindly trust the company's personnel office or our elected officials to make our financial decisions? I say no way!
My very strong view is that as individuals we'd better do what's required to learn about what's what with 401k plans and other financial instruments. We're all quite capable of learning what we need to know and will be better off for having done so. Our country will be better off as well.
If we don't learn to take care of ourselves financially and act on our own behalf, we'll continue to get the government we deserve, and that's not the one we need or would want if we knew what's really happening.
Getting a better individual and government financial reality, in other words, must become job#1 with respect to financial literacy, both personally and as a responsible member of a self governing free society.
It's not that hard. Let's do it.
Thanks. Bob.
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