Forum Thread

Americans Are Increasingly Dependent on Social Security For Retirement

Reply to ThreadDisplaying 7 Posts
  • Are you sure you want to delete this post?
        
    It is no secret that the number of Americans who rely on Social Security benefits for nearly all of their income is rising and only expected to get higher moving forward. This can be attributed to a lot of factors, but the elephant in the room is the fact that employers just aren't offering pensions at a rate they used to and 401k's or Individual Retirement Account's don't provide nearly as much financial security as a pension.

    What can be done about this? How can we figure out a way to help people save up for retirement now that pensions are no longer the norm?
  • Are you sure you want to delete this post?
        
    I'm not sure if there is a more effective way right now than just promoting good savings habits. Obviously that's not a popular answer to hear, and many aren't making enough to set much if anything back for when they are older. But if you are, it is imperative that you realize one day you won't be able to produce the amount of income you are today. Setting even a small amount aside, every month, can add up.
  • Are you sure you want to delete this post?
        
    J.K.Logic Wrote: I'm not sure if there is a more effective way right now than just promoting good savings habits. Obviously that's not a popular answer to hear, and many aren't making enough to set much if anything back for when they are older. But if you are, it is imperative that you realize one day you won't be able to produce the amount of income you are today. Setting even a small amount aside, every month, can add up.
    I agree that saving as much as you can is the most important thing anyone can do. Setting a budget (and sticking to it) are also really important if you want long term financial security.

    One thing that finally set off the light bulb in my head a few years ago was when my father sat me down and showed me how even setting aside a minimal amount each month adds up over 25-30 years. I fully understood this idea before my dad sat me down, but it wasn't really clicking. Seeing that wealth add up over time finally got me to start setting aside a lot more money each month and to diversify my money into various interest bearing accounts that have different levels of risk and reward.
  • Are you sure you want to delete this post?
        
    Practical math as example, just to see it written out...

    $50 bucks saved every month for 30 years (without any interest beared) = $18,000
    $100 bucks with same scenario = obviously double ---- $36,000

    Imagine investing that wisely over 3 decades as well. It might not be an awesome amount of money to retire on. But it would literally be like taking what would be a cable bill, and instead stashing that money away. Adds up over time. If you did it over the course of your entire working life (roughly 45-50 years typically right?), you could reasonably have 50K - 100K saved, possibly even much more if invested in the right interest accounts, without going crazy with savings either.

    Then the question becomes, how much is enough to comfortably retire on?
  • Are you sure you want to delete this post?
        
    J.K.Logic Wrote: Then the question becomes, how much is enough to comfortably retire on?
    That's the million dollar question. The main problem with the vast majority of companies doing away with the pension system is that people no longer will have guaranteed income for the remainder of their lives. It's going to be very difficult to determine how much money you will need to live out the rest of your life when you know you are dependent only on yourself. You're one catastrophe away from bankruptcy with no one there to prop you up.
  • Are you sure you want to delete this post?
        
    Richard1022 Wrote:
    J.K.Logic Wrote: Then the question becomes, how much is enough to comfortably retire on?
    That's the million dollar question. The main problem with the vast majority of companies doing away with the pension system is that people no longer will have guaranteed income for the remainder of their lives. It's going to be very difficult to determine how much money you will need to live out the rest of your life when you know you are dependent only on yourself. You're one catastrophe away from bankruptcy with no one there to prop you up.
    I would be more worried about starving, than bankruptcy, in that scenario.
  • Are you sure you want to delete this post?
        
    YellowSubmarine Wrote: I would be more worried about starving, than bankruptcy, in that scenario.
    You and I both.

    This is a really tough problem to solve. How do you help people save money now that a pension system isn't the norm anymore? It's a multifaceted problem that won't be solved over night, but I sure hope we start trying to figure it out soon.