Workers Have Retirement 'Overconfidence'

Yahoo! News ^ | 4/4/06 | EILEEN ALT POWELL

[libertarianPA]

Funny. I thought the purpose of Social Security was to create a situation in which a retiree didn't HAVE to worry about his retirement. Shouldn't retirees be "overconfident?" After all, for the past 70 years, we've taught them that they didn't have to worry about their post-labor life.

Is this article implying that Social Security isn't enough? If that's the case, shouldn't we just let everyone keep the money they now pay in SS and let them save or invest it as they wish?

[Fury]

Whaat? You mean Social Security is not enough for me to retire on? Nooo!!!!!!!

[2banana]

The majority of American workers think they'll be able to retire comfortably

They will, if they are local, state or federal workers. Their pension plans (funded by the taxpayers) are freaking unbelievable...

[linda_22003]

"Funny. I thought the purpose of Social Security was to create a situation in which a retiree didn't HAVE to worry about his retirement."

Whoever thinks that hasn't been paying attention since 1935! It was never intended to be one's whole retirement plan; it was intended to be part of the "three legged stool" - SS, savings, and pensions. Now that pensions are pretty much replaced by 401k accounts, more of the responsibility for retirement is on the worker.

Social Security was intended to keep people from being in abject poverty in old age, not to provide, by itself, a "worry free" retirement.

It is hard to project what you'll need in retirement, so people tend not to do any calculations. I did read something rather helpful that gave a benchmark of six times your annual income as being a good amount to have tucked away at the time you retire. In my husband's and my case, that means about a million dollars, and at the age of fifty, we're well over than halfway there.

[linda_22003]

"well over than" = "well over", sorry about the fractured sentence.

[oldcomputerguy]

"I thought the purpose of Social Security was to create a situation in which a retiree didn't HAVE to worry about his retirement."

The purpose of SS was to keep them from living on the streets. It still functions reasonably well in doing that.

[sinkspur]

Is this article implying that Social Security isn't enough?

Social Security has never been enough, and was never touted as a substitute for personal savings, even when FDR introduced it.

If that's the case, shouldn't we just let everyone keep the money they now pay in SS and let them save or invest it as they wish?

I'm in favor of that, but those who aren't saving wouldn't save the Social Security withholding either.

[No Blue States]

"They will, if they are local, state or federal workers. Their pension plans (funded by the taxpayers) are freaking unbelievable..."

I work for the state and they take over $200 per check out for my retirement, my money..not the taxpayers.

[peyton randolph]

Whoever thinks that hasn't been paying attention since 1935! It was never intended to be one's whole retirement plan; it was intended to be part of the "three legged stool" - SS, savings, and pensions.

---

Worse than that...at the time, the average American's life expectancy was such that he/she would die two years before being eligible to collect a dime.

[oldcomputerguy]

"I did read something rather helpful that gave a benchmark of six times your annual income as being a good amount to have tucked away at the time you retire."

Disregarding other income sources in retirement, the amount of money you need is 20-25 times the amount of money you need each year on which to live. The generally accepted yearly draw-down is 4%-5% which presumably then provides an income you will not outlive.

Other sources of income like pensions and SS reduce the lump by their respective contributions to yearly income.

[headstamp]

And man if they had all the money sent to FICA all those years invested conservatively in an Index Fund, they'd each have 3 times the money or more coming in each month instead of the paltry SS payment in retirement.

[D-Chivas]

more than half of all workers say they've saved less than $25,000 toward retirement, according to the Washington, D.C., based research group. Even among workers 55 and older, more than four in 10 have retirement savings under $25,000.

This is downright pathetic.

[ClaireSolt]

As you say, "Social Security was intended to keep people from being in abject poverty in old age." However, its original purpose have bee so perverted that we still have about the same % of elderly poor women as we did when it started. In addition we have a sense of entitlement among everyone else. I think Social Security reform should return to this specific goal and stop paying everyone in America. If people didn't have to pay 13% deductions for Social Securty, but paid a lower insurance contribution, they could put more into their 401K's.

[meyer]

The democRATS seriously want to harness this trend. They despirately want to use "means testing" in determining who gets to collect Social Security retirement benifits and who doesn't. In the most liberal plan, those who save for their own future (Republicans) would collect little or no SS retirement while those who squandered their paychecks would stand to collect the most.

This is why SS should be privatized, or individualized in such a way that benifit collection is strictly connected to the amount that is paid into the system over the working years. The government should not be redistributing SS money.

[oldcomputerguy]

" This is downright pathetic." ( poor retirement savings)

Well after watching a couple of Oprah shows on the "Debt Diet", it is clear that the current crop of American's are absolutely financially clueless ...........but they are probably properly grounded in "Woman's Studies" or other equally useful subject matter.

[LambSlave]

If people didn't have to pay 13% deductions for Social Securty, but paid a lower insurance contribution, they could put more into their 401K's.The money isn't being "saved" at all, it is being used to pay out to current beneficiaries and fund other government programs... It is obvious even to congress critters that folks would be better off putting the money into an index fund, but it will never happen because of demographics; more retirees, less workers... we can't cut SS by much, since soon that 13% won't even be enough to pay current retirees.

[misterrob]

They don't pay into SS. They have money deducted but it is managed so as to make more money which isn't really all that hard to do when compared to SS.

40 years of employment with $5,000 a year in deductions and matching at 5% interest gives the person over $600K in their retirement account. And that's for someone who averaged maybe $40K a year over their career. Have a spouse who worked and you can live pretty large for the last 15 years of your life.

[yobid]

I work for the state and they take over $200 per check out for my retirement, my money..not the taxpayers.
>br> With all due respect, where do you think you paycheck comes from?

[krunkygirl]

bump and save

[linda_22003]

Extremely pathetic, and tends to back up post #7's theory that those who don't save wouldn't save their SS money if they were given it directly, either.