DIY Retirement System Is Failing Many American Retirees

There is a retirement crisis in this country. It is becoming more apparent as 10,000 baby boomers turn 65 every day. A recent Wells Fargo survey found that more than eight in ten current retirees fund their retirement primarily with Social Security, or a pension; just 5% do so from personal savings such as an IRA or 401(k). Seven in ten retirees say they would have “no idea what they would do” without Social Security.
Contrast them with younger generations who expect savings to be the top source of their funding; 45% of millennials say they must rely on IRAs or 401(k)s and only 25% expect to rely on Social Security or a pension.
Everyone talks about income inequality, but there is persistent extreme retirement inequality and it’s getting worse for the lowest-earning workers. Workers in the top 20% of earnings distribution have held about half of all retirement wealth between 1992 and 2010, whereas the share in the bottom 20% fell to 1% from 3% in the twenty-year period. And the percentage of those without any savings among the bottom earners increased to 51% from 45%.
No matter what income group you look at savings makes a huge difference. The top 10% of savers in all income groups, from the highest to the lowest consistently held 10-20 times the retirement wealth of the bottom 10% of savers.
What has caused the retirement crisis and are there policy and personal solutions to fix it? Two retirement experts will join us with some answers. Teresa Ghilarducci is a Professor of Economics at the New School for Social Research where she is Director of the Schwartz Center for Economic Policy Analysis (SCEPA) and the Retirement Equity Lab (ReLab), which researches the causes and consequences of the retirement crisis. Ghilarducci is a co-author with former WEALTHTRACK guest, Tony James of Rescuing Retirement: A Plan to Guarantee Retirement Security for All Americans.
Jamie Hopkins is Director of Retirement Research at Carson Wealth, and Finance Professor of Practice at Creighton University College of Business. Hopkins a frequent WEALTHTRACK guest is an expert on retirement income and author of Rewirement: Rewiring the Way You Think About Retirement.
WEALTHTRACK #1624 broadcast on December 13, 2019.
More info at: wealthtrack.com/americas-do-i...

[@peredavison8987]

I've managed my own 401k. Maxed it out since 32 y/o. retiring at 59 y/o ,very well off. I never trusted someone like Jamie. Buy annuities from me! What BS. Therre's plenty of good investing newsletters and advice out there to avoid the "professionals" with their cufflinks and smooth talk. Never trust them with your money.

[@bernie9728]

I retired at 62 and started drawing my Social Security right away. You notice I said "my Social Security". It's my money. I put it in and now I want it back so I'm getting it back. Some folks will tell you to wait because you will get a higher amount if you wait. Well define "higher amount". Truth be told the odds are if you wait you will get less total money. Remember If you wait until age 70 to start taking your money you will get a higher monthly payout. But you need to consider the fact that I will already have 96 months of payments in my pocket before you get your first check. The odds are you won't live long enough to catch up. That's because you are only gaining on the difference not the whole check. You also need to ask yourself what is more important. More time retired when you are young enough to enjoy it, or more money when you are old and can't remember what day it is. Coming up on 6 years retired and there is no doubt in my mind that I made the right choice. You have to do what's best for you.

[@divesaildivesss]

If you invest your ssi checks, and get the average s&p return of 10%, and let it compound until 67, you will have more money. I took mine at 62.

[@Five0Music]

“Humans are flawed.” This point is so salient, and glossed over in seconds. I’m not one who believes the entirety of the retirement crisis is the fault of the individual. However, I do believe that a much larger portion of this crisis is due to poor personal choices and chosen lifestyles/careers than the industry seems willing to publicly say these days. Those who often decry pensions are unwilling to take the government jobs which provide them. Those who live an outsized life on debt are unwilling to admit they are spending their retirement now... and society treats them as victims instead of the simple truth of stating they have been fools with their money. I’ve been that fool, and had to learn that financial security is unattainable until you cease these patterns of behavior. The solutions presented by these guests ignore the problem, and shift the responsibility to the government (I.e., the taxpayer). I agree some adjustments will be needed to Social Security, but no system can shoulder the failure to handle finances responsibly through your life. Some who will not work/save, should do without. This is a harsh truth society has lost the backbone to accept.

[@superduper9357]

@Kayson Niko you're right, no one gives a shit!

[@gevdarg]

The only counter I would offer to that is the 2008 Financial Crisis where there were many who made poor choices and were made whole, but they were many more who made wise financial choices and found themselves adversely and disproportionately affected by those who didn't.

[@Five0Music]

@@gevdarg I wouldn’t disagree that there are times when good planning is undone but unscrupulous business practices. Living in the Houston area, I saw the Enron fiasco affect many, for example. I am only contending that this is neither the norm or the crux of the retirement issues in the United States. It another case of “we met the enemy, and he is us!” The solution to solvency in retirement is never going to come from a government that is irrevocably in debt, to the tune of ~$30 Trillion as I type this. It has to come from a change of attitude and habit by us, the citizen/worker/retiree.

[@gevdarg]

@@Five0Music Agreed. Timing is everything. Sometimes, you can lead the horse to water, but you can't make them drink. I agree that government isn't THE solution, but I also believe it can be part of the solution. My wife and I found ourselves having to taking major steps to deal with the adverse effects of the 2008 Financial Crisis which were inflicted upon us by the irresponsible actions of others, not ourselves. So we're grateful that the government, via Social Security, is playing some role in our ability to retire comfortably and securely.

[@Five0Music]

@@gevdarg Well said, sir. I wish you and your wife the best in finding all the great things that you’ve looked forward to in your retirement! I agree that Social Security can play a part in anyone’s retirement plan. I elected to put Social Security into the “hope I get it, but I’m not relying on it” column of my retirement plan. It will certainly help to have it (I become eligible in ‘22), but we would be ok if it were somehow taken away. I never made a huge income, so it took a long, long time to prepare. It’s that preparation I don’t see happening with the majority who could do so, and the result will be predictable. Those who do nothing to avoid living on social security alone in their old age have a tough life ahead. I pray there will be a life change for them before the years get away.

[@gregmoses8708]

This video assumes that people aren’t educated about saving or investing in a do it yourself system. I’ll go further and say too many people are racking up debt to keep up with the Jones’s. Live within your means and “luck” is on your side.

[@lets_discuss5352]

So true!

[@treesnmoguls]

Yep, Iphones, quartz counter tops, latest big SUV being more important than an emergency fund to protect the 401K during an emergency!

[@elizabethlibero1878]

Yes some are irresponsible, but when one major medical problem can bankrupt you, wages don’t go up but everyday costs do, I do not think it is fair to generalize that it’s all people keeping up with the Jones’

[@phyllo2694]

Just recently retired and did the deferment for 1 extra year. It along with my savings makes a difference.

[@usandmexico]

Unfortunately, I think Teresa is right. Many in the US like to say they don't want gov intrusion in their lives, but in practice they want it. They say they don't want socialism while clinging to all kinds of government services. They claim self-reliance and personal responsibility, but they don't take the time to seriously look over their personal money matters and set them in order. I was recently talking with a wife and full-time worker (about 40 years old) at one of the large defense contractors, who is also a business student and conservative type. You would think she is responsible enough to set her financial matters in order. She is completely unaware to which funds her 401(k) contributions are going, which are matched. She looked surprised when I said she needs to know for various reasons, in particular the expenses. She thought it was a completely hands-off benefit, like a pension.

[@HeritageWealthPlanning]

usandmexico government services are socialism, eh? Not that’s just silly.

[@elizabethlibero1878]

Is her employer making those decisions for her? Most 401s you have to pick where the money is allocated.

[@jcman240]

I see lots of peoples financials being a CPA and I can tell you higher education and income does not translate to financial competence. The number of people I see making over 6 figures who don't save into 401k or only save a few percent is disturbing.

[@kbrabson]

I talk to many folks about retirement. I've found a common thread: they don't have a written budget that they follow and they don't know the details of their retirement plans provided by their employer. I've been through divorce, disability, and huge medical bills....all within 8 months of each other. Saving for the rainy day made all the difference.

[@jimjackson4256]

Govt employees have no concerns at least in ontario canada.Their pensions are backed up by the rest of us and we have to fork it over or go to jail.

[@trudy6132]

This lady is nuts! We have a retirement crisis but it also includes social security. She isn't being honest about social security and putting trust in the gov't is a terrible idea. Providing people education, don't allow people to borrow from 401(K) and other legislation to encourage people to save more and become educated (maybe a credit systems or something), more incentives is a better idea.

[@aliasoma]

You won't get the benefit of deferring until you hit ~84yrs old. If you honestly anticipate living past that point then defer as long as you can, but if your health/genetics doesn't point to that conclusion then you are better off taking SS when you can.

[@thefrugallyretiredcouple9926]

exactly!!!

[@jeffgoldsmith1679]

100%, my father died at 84, mother still kicking at 94 so I'm figuring 88 tops. Anyway the other issue is: By deferring until 70 to get the extra 24% you just lost 3 prime years of travel and enjoyment and possibly incurred health deterioration.

[@rokyericksonroks]

After nearly forty years of falling returns for bonds, we now turn with scorn to the older portion of our labor force and demand : “Why haven’t you saved more?”

[@markmyjak7739]

I have never seen of these people talk about selfsustaining retirement portfolios. Where one creates a portfolio large where they can live off the dividends and not worry about tax deferment, and needless junk that goes with pensions and 401(k)s.

[@jcman240]

Wait til 70 to collect SS? That's a gamble that would pay off nicely if you live long

[@christopherhennessey8991]

There are times that emergencies crop up and just devastate your savings. There are also things such as layoffs ,shut downs of businesses,thus loss of jobs.

[@avmagic]

We should change the SS withholding to 20%/5% employer/employee as the employers have relief themself of pension responsibility. 401K has failed us as the performance has been sucked out by professional management fees. Social security needs to cover 70% of retiree's needs instead of the 1/3 ss, 1/3 pension and 1/3 401(K) envisioned.

[@jackburton806]

And we all know if you delay social security you get 8% more a year; that number is drummed into our heads in every article and show about retirement. If only I lived 8% longer for each year I defer. And coming as a shock to nobody; annuities yep annuities. Not just annuities but fixed index annuities. Annuities are pretty much horrible for the person buying them. Maybe SPIA might make sense for a part of your income stream but there are so many better options.

[@benedit71]

Whether its an annuity, whole life insurance plan or a timeshare, I cant stand contracts with a laundry list of rules and restrictions.

[@notagain779]

@@benedit71 , Yes contracts with a laundry list of rules and restrictions. My mother, who recently died at age 104, was one of the first people to be offered a new product, the long term care policy, in her late 60's. By age 85, premiums were rapidly increasing, and by the time she reached 93, she said to me that she was going to cancel it. After all the years of paying in! I so strongly disagreed, that she kept it. By 99, she needed to call on the policy to go into assisted living. Wow, they sure didn't want to pay up!! What the insurance company put us through was ridiculous. They seemed to think she was going to start growing younger and stronger, and return to her house! They sent a nurse out to reassess her every three months, to see if she was getting "better". No kidding! Our total outlay in premiums was $54,000, and they paid out $73,000. But they had our money all those years. I say to people wondering whether they should buy a policy, find out what the premium is, and then regularly pay that to yourself into a good diversified investment like the total stock market index.

[@benedit71]

@@notagain779 Thank you for sharing a real world example, you are right, that could have easily amounted to several hundred thousand dollars in the market and that is a conservative estimate. Your story is a real eye opener and I will share this with family and friends.

[@notagain779]

@@benedit71 Oh, and I might add, the insurance company pays out only a percentage of the assisted living bill each month. (about half). You really get the feeling that they want you to die as soon as possible!

[@benedit71]

@@notagain779 I thought those products were supposed to provide peace of mind, sounds like they have more holes than swiss cheese.

[@RoyalAce2]

The biggest canard, especially for people who have a couple of nickels to rub together, is the recomendation to defer. There are already 5 means tested tiers to medicare deductions and you'd have to live in lala land to think means testing and 100% taxation of benefits (from 85%) aren't in the near future. Deferral is especially stupid if one has a spouse that doesn't qualify for benefits in their own account (stay at home mom for example) and who would otherwise be getting a 50% benefit through the deferred period. They never tell you about that.

[@christopherhennessey8991]

So glad I am receiving my pension and Social Security benefits.

[@davidmurray6070]

Good video... but the repeated use of the word "luck" was a bit much. I certainly don't want to blame folks facing a difficult retirement, but if they're honest with themselves there were MANY opportunities to make better decisions during their life to improve their circumstances. I agree that we need a system to work with a 'flawed' human that thinks they won't ever grow old and tend to spend their future earnings today. All that said, I definitely worry about growing government further and limiting the freedoms of individuals to be responsible for their own future. No easy decisions here.

[@lifestoryguy]

It's even worse than you think because many working-class people like myself die young which means we don't even get the measly benefits that the rest of the population get. Also, if you have an economic system that relies on the vast majority of the population spending much of their working lives being in and out of debt and being impacted by boom and bust cycles in the economy it's amazing that anyone on a low or modest income ends up with anything in retirement. Unless you are prepared to drastically alter the underline economic system you won't solve the problem for millions of people who will continue to die young or spend their old age living in poverty. But what do i know I'm just a working-class guy from Glasgow with an average life expectancy of 69.

[@aliasoma]

This guy speaks about employment/unemployment like someone who has never experienced it in any meaningful way.

[@spevman]

Well, he does look like he's about 17 years old, so...

[@lets_discuss5352]

Remember, he's a professor; once you're tenured, you're forever relieved of the reality and ugly side of unemployment (unless you don't something unlawful).

[@ebenezerclark123]

I made no more than $25K, Saved 5% first Deposit Acct. Switched to Gold & Silver, retired 5 years my SAVINGS PAYS 10% RISK FREE, >>>CLOWNS

[@joannemeeks745]

Wow. It's starting to happen right now!

[@paulaballetdancer4432]

Hod forbid the companies should be loyal to their employees. This woman could care less about the middle class

[@firefeethok_tui2355]

Americans are overweight, undisciplined, don’t have pensions, many have no plans, no savings, corp. greed is so cliché but so real, and has contributed to the downward spiral and it’s getting worse all the time. The best time of this country in histoty, the golden age, is over. There are too many people and they have chosen to use social services and basically have given up and are now becoming a burden. I Work and save the maximum amount of money I am allowed and it still will not be enough as cost-of-living raises much faster than wages and ability to save. A once great country is now the laughingstock of the world

[@jeffgoldsmith1679]

Teresa sounds like a soothsayer now, since this was broadcast in December, talking about the next inevitable down turn. A lot of holier than thou and let them eat cake comments. The bottom line for those who did not bounce back from poor decisions or never had the income to save anyway Teresa had some great solutions that don't raise taxes. Lock down the 401K no early withdrawals, no loans. Some ideas of my own, Auto enroll all employees in 401Ks, match Roth 401K contributions to that years 401k contributions and increase employee (not employer) SS tax to 8%. If people can't be disciplined design a system to account for that flaw. Now the responsibility of caring for these people doesn't fall on us later.

[@dc76384]

What a shame. Somehow getting a good career that pays you well enough to save for retirement, and accumulating wealth is a reason to bash people as being greedy a d evil.

[@HeritageWealthPlanning]

I love how consuela makes these declarative statements as if they’re facts Yet the evidence is SO overwhelmingly against what these people are saying. They HAVE a to know this. Thus what’s their ulterior motive?

[@HeritageWealthPlanning]

Begging to see theresa’s research where she says she knows how much we have in our retirement accounts. How does she get that data? From where does it come? Let me guess a Fidelity or Schwanb study that says average retirement account balance is... 🤪

[@LostInThe0zone]

I wondered that as soon as I heard her say that. And then talks about the retirement system based on employment, as though employer funded pension were responsible for a vast majority of workers. Simply never was true.

[@jamesmorris913]

Normally, Consuelo is a very good interviewer..but I think she had one too many Espressos, before this one..constantly butting-in to the guests responses (especially in the first half) isn't her typical style.

[@wdeemarwdeemar8739]

Ha ha ha I have rarely heard such crap. Theresa must work in Bangladesh.

[@ariefraiser140]

But retirement has always been a do it yourself system for most people in this country. That is part of the reason social security was created. Pensions even before 401k were only available to a small percentage of workers.

[@briansutter7696]

If your lucky and actually make it to 90yrs old your going to be spending all your money in a nursing home and you will die broke. Retire as young as you can and enjoy life while you still have your health and working till your 70 makes no sense.

[@randallmunson2098]

Annuities are only good for people who ABSOLUTELY don’t want to manage their income sources in retirement. Doesn’t take much homework to learn how to manage investments, but, if you’re lazy and stupid ……. annuities might be right for you.

[@briansutter7696]

I love how these professionals always preach working till 70. That may be easy to reach if you sit behind a desk and stare at a phone or computer. People who actually work with their hands say a carpenter or roofer isn't going to work till 70 thats ridiculous. In the year 2030 these people are going to advise working till 80. Americans would rather live in a tiny house then work every moment of life. I would rather take social at 62 and receive more checks then hold off till 70 and die 5yrs later.

[@landlordnation]

The government doesn't provide Social Security we the people along with the employer pay 6.2 percent out of our check in to Social security. The government isn't giving us anything in terms of Social security. Please stop saying that.

[@Dottydawes]

Fact is the government has pilfered SS and that’s why it’s in such bad shape.

[@David-Musiczone]

More government is not the solution!

[@ariefraiser140]

Yes it is. If it was for social security the majority of retirees woyld be living in adject poverty like before. The private sector has always done a poor job with this issue.

[@Dottydawes]

@@ariefraiser140in a lot of cases SS has kept people from being richer than they are. If you took your 12% SS and invested in the stock market you would be far better off based on historical averages. The question becomes how a system could be out in place to accomplish that by giving people some level of autonomy over their retirement saving, get a larger return and not be a dependent of the government.

[@David-Musiczone]

Don't listen to these clowns

[@fredost1504]

Yeah and your solution to this 'problem' is to put their hard earned savings with you so you can suck fees out of them. No thanks. Ill take my chances. BTW I am retired without SS, so far.

[@63dmt]

So people are too stupid to successfully save money for retirement, so they should be forced into a government program that will do it for them. Got it.

[@jeffgoldsmith1679]

yes

[@christinemartin63]

I've watched over 30 of these WealthTrack videos. All have been terrific. This one was the poorest. These two liberals -- with their repeated "luck" references -- were irritating.