Sunday, July 18, 2010

Going Broke in Retirement? Republicans ignore Reality, Again.

While Republicans demand we lower wages and benefits to complete their vision of a true free market, our eventual retirement from those wonderful private jobs will leave us broke and destitute. But that's then, this is now. If someones going to win the upcoming mid-term election, it's going to be the Santa Claus party of lower taxes and market forces.

What is left out of the following research is a private sector movement offering lower pay and few if any benefits. If baby boomers are in trouble now for not having enough money in retirement to cover living expenses, what does that mean for those subject to the global race to the bottom in wages? The study below ignores that reality.

About 47 percent of early baby boomers, now 56 to 62 years old, are not expected to have enough money to cover basic living expenses like food, utilities and health care through retirement. “Their Social Security alone will not pay for all they need,” said Jack VanDerhei, research director for the Employee Benefit Research Institute study.

Members of Generation X, ranging from 36 to 45 years old, should be in better shape because they have more time to prepare. Nevertheless, 44.5 percent of them also are expected to run out of money, the study said.

“People haven’t saved enough and have invested poorly,” said VanDerhei.

Prior to the recession, many baby boomers were trying to catch up for years of deficient savings by investing heavily in stocks. But the approach blew up after 2007, when the stock market crashed 56 percent.
And the less often mentioned possibility of going broke due to health problems is a trap likely to snare those with higher incomes.

Although middle- and lower-income people are most at risk of running out of money in retirement, even the highest-income people, baby boomers now making more than $72,500, could be at risk if they have a disease or accident that requires them to enter a nursing home early in their retirement years, said VanDerhei, who led the study.
Like the federal re-insurance programs for nuke plants and hurricane prone coastlines, isn't the public economic security in retirement just as important? And shouldn't we get behind it, instead of pretenting the problem will work itself out somehow?

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