Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

More Pensions and Retirement Disasters

Personal_Finance / Pensions & Retirement Mar 16, 2010 - 09:42 AM GMT

By: Nilus_Mattive

Personal_Finance

Best Financial Markets Analysis ArticleI can’t believe the number of frightening retirement stories I’ve seen in just the last week. They suggest that the vast majority of our country’s citizens are completely unprepared for life after work. They point to a governmental backup system that is getting ever more desperate. And they suggest that other traditional sources of retirement income — such as corporate pensions — are in grave danger of imploding.


Let’s start with a truly mind-blowing fact …

43 percent of American Workers Have Less Than $10,000 in their Retirement Accounts!

Yes, you read that right. According to the Employee Benefit Research Institute’s 2010 Retirement Confidence Survey, a whopping 43 percent of American workers said they have less than $10,000 in retirement savings.

That number excludes pensions and housing wealth. But even if those areas weren’t as shaky as they are, does anyone actually think that $10,000 will even last the average American half a year in retirement?

Oh, and it gets worse — 27 percent of the workers surveyed had less than $1,000 in their accounts! Think about it — a full quarter of Americans barely have enough saved for a few utility bills.

No wonder only 16 percent of the survey respondents said they were “very confident” in their ability to save enough for a comfortable retirement, while 24 percent said they were going to have to work longer.

Scary Retirement Survey Results Chart

Now, we could blame the market meltdown and the recession for some of this, especially since all of these numbers have been getting worse over the last few years. But I think a lack of planning and personal responsibility play an even larger role here. Why?

Because an astounding 54 percent of the survey participants said neither they nor their spouses had even tried to figure out much money they’ll need in order to live comfortably in retirement!

Percentage of People Working Past Age 65 Chart

Look, if you don’t know how much you’ll need … you aren’t putting a plan in place … and you aren’t saving vigorously (60 percent said they weren’t saving at all!) … then you’re absolutely doomed to fail.

What’s more, as I’ve said time and again here in Money and Markets, these people shouldn’t expect the traditional governmental backup to save them. For more proof, just consider another piece of news that came out last week …

Uncle Sam Might Want Your Social Security Checks!

As reported in a recent Wall Street Journal, a small part of the 2008 Farm Bill will now allow Uncle Sam to withhold Social Security funds from anyone with outstanding debts, even if those debts are ten years or older.

This new legislation applies to a broad category of outstanding debts, including farm and small business loans, and a similar statute of limitations was lifted on student loans in 1997. In other words, only income taxes continue to remain covered by a decade-long limitation.

Now, don’t get me wrong. If you borrowed money from the government, I think you should be held accountable until it’s repaid. Otherwise, the rest of us are simply footing the bill for your irresponsibility.

And I absolutely don’t think you should receive another dime out of any program until those debts are repaid! If anything, the fact that Treasury can only withhold 15 percent of benefits (down to a minimum monthly payment of $750 in all instances except owed income taxes) makes little sense.

But there are three important things I’d like to note about this new legislative twist …

First, the fact that Washington is coming after this source of revenue so aggressively demonstrates just how desperate they are to get more money into Social Security’s coffers.

Second, regardless of morality, it’s going to mean more retirement pain for many Americans.

Third, this is the government we’re talking about, which means there’s big potential for abuse and mistakes surrounding the new legislation.

In fact, the Wall Street Journal article goes on to talk about a couple examples of the “sometimes-Kafkaesque process debtors can face when challenging the validity of a claim.” It’s truly scary stuff!

And last but not least, let’s talk about one more frightening retirement story. Namely, the fact that …

“Public Pension Plans Are Adding Risk to Raise Returns”

So says a New York Times article dated March 9. The piece goes on to explain that some of the nation’s public retirement plans are turning to riskier investments to try and regain money lost during the market downturn:

“Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now.”

That’s disconcerting news. After all, what happens if markets suddenly turn against riskier investments again? Then public pension funds will suffer additional losses rather than making up for past ones. And if you’re a taxpayer in that state — you’ll end up footing the bill in the end!

Meanwhile, the article also notes that corporate pension plans are becoming more conservative, and abandoning stocks for bonds, saying …

“Pension funds rarely trumpet their intentions, partly to keep other big investors from trading against them. But some big corporations are unloading the stocks that have dominated pension portfolios for decades. General Motors, Hewlett-Packard (HPQ), J. C. Penney (JCP), Boeing (BA), Federal Express and Ashland are among those that have been shifting significant amounts of pension money out of stocks.

“Other companies say they plan to follow suit, though more slowly. A poll of pension funds conducted by Pyramis Global Advisors last November found that more than half of corporate funds were reducing the portion they invested in United States equities.”

Again, it’s interesting to note that these firms are mainly switching into longer-dated government bonds — precisely the investments that many of us at Weiss have been warning about lately.

The plans say they aren’t concerned about a collapse in long-term Treasury prices because they’ll hold their bonds to maturity. But even then, I can’t figure out why they think now is the time to lock-in pitifully low interest rates.

If anything, it seems to me that both the public and private pension funds are making bad long-term moves on opposite ends of the spectrum, which only furthers my main point …

If You Want to Succeed and Enjoy Retirement, You Need a Realistic Plan and You Absolutely Must Stick With It!

Put all these little tidbits together, add in all the big-picture trends that I’ve covered many times before, and you begin to realize just how dire the overall state of retirement is in the United States today.

Quite frankly, it sounds like the vast majority are either going to work until they die or live their golden years pinching every penny.

However, that doesn’t mean that you and I have to be among them. The key is planning and preparing. There are lifestyle and work adjustments that can be made. Investments that can help build up nest eggs and kick off income, conservatively. Strategies that can maximize Social Security benefits, lessen tax bites, and more.

So ultimately, it boils down to getting the facts and then having the discipline to put your knowledge to work. I’ll do my part to continue covering this important area of investing. And I trust that you’ll continue acting on the information that suits your needs the best.

Best wishes,

Nilus

P.S. For more information on some of my favorite retirement strategies right now, check out my new online education course, The Ultimate Retirement Survival Guide.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules