A recent Washington Post article offers a grim assessment of future U.S. retirees' financial prospects. Drawing on a variety of economic data and reports, the article contends, “For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents…”
Some points from the article:
- The recent economic downturn destroyed 40 percent of Americans’ personal wealth
- Americans’ retirement savings are approximately $6.6 trillion below where they should be (that’s about $57,000 per household)
- 53 percent of employed Americans 30 and older will not be financially prepared to maintain their standard of living in retirement if they continue on their current paths, according to the Center for Retirement Research. This is up from 38 percent in 2001 and 30 percent in 1989.
- Americans from age 55 to 64 have a median retirement account balance of $120,000, which would fund an annuity paying only $575 per month in retirement
- Medicare premiums are likely to increase from 12.2 percent to 14.9 percent by 2030
What the Post Article Didn't Say
These figures demonstrate the importance of ensuring that financial planning services and products remain available and affordable for middle-market Americans. They highlight the role insurance and financial advisors can play in helping their clients secure their financial futures.
At a time when personal retirement saving is falling well short of the mark, lawmakers face increasing pressure to reduce benefits paid by government programs like Social Security and Medicare. Life insurance, annuities and employer-sponsored retirement programs will have to fill the void for many Americans.
It is not a time for Congress to make these insurance and retirement products, which 75 million American families look to for financial security, less attractive or beneficial. Changing the tax status of life insurance or retirement savings products would do much more harm than good. It would damage the very products that often help keep Americans self-sufficient in their later years while reducing their reliance on government programs.