The Facts of U.S. Retirement Stats

In a recent "tweet show", I mentioned a posting by Tyler Durden.  It was posted at Zero Hedge, titled "So You Want To Retire? Five Disturbing Statistics About Retirement: An Infographic." This article provided disturbing facts about lack of financial planning by Baby Boomers in terms of saving for their retirement, and/or even any attempt at achieving financial self-sufficiency, let alone financial freedom!

While it is bad enough that 46% of Americans have less than $10,000 saved for retirement, the facts get even worse when one takes into consideration that 29% of Americans have less than $1,000 saved for retirement!

The Infographic included in the article then concludes, quite correctly, that the good news is... it's never too late to start thinking about retirement planning.  True as that may be, quite literally there comes a time when it is simply too late to think about retirement planning, because the horse had bolted.

By way of examples, the article offers that people in their 50's should:

• cut off grown kids
• exploit catch-up provisions
• lock up long-term care
• dial back investment risk, and
• know where you stand

Of these 5 ideas, only the second bullet above makes sense, and that's only true if one is still working.  The contribution limit for U.S. 401(k) plans was increased from $17,000 in 2012 to $17,500 in 2013.  However, the catch-up contribution limit for employees age 50 and older will remain unchanged at $5,500.

The above simply means that an employee - with a paying job - can maximize his/her savings to the tune of $17,500 (tax deferred) and that an employee aged 50+ can contribute an additional $5,500 per year (tax deferred).  This latter age group represents the bottom of the so-called Baby Boomers in terms of age category.  Assuming an employee works another 10+ years, this catch-up provision would amount to $100,000+ (compounded).  But... it also assumes that this same employee was already maximizing his/her 401(k) contributions, because otherwise the catch-up provision is redundant.

Given that half of the working population has only saved $10,000 - according to the Employee Benefit Research Institute - all 5 bullets above may therefore prove to be redundant!

So, the question becomes... what now?

Tyler concluded his article on Zero Hedge by saying "To all Americans in their twenties, thirties, forties, or even fifties, naively looking forward to their retirement, we have two words: "good luck."

I am less inclined to throw in the towel, proverbially speaking.  We know that we simply cannot trust or rely on the government to bail us out of our financial misery, caused by their (and our) decades of financial mismanagement.  In a follow-up post, I will explore a few ideas that may help some people realize that a new beginning is possible, although "saving your way out of trouble' over a short period - although beneficial - will not deliver you into a realm of financial freedom.