We’ve all heard there’s something of a perfect storm brewing on the retirement front, what with the U.S. population aging rapidly, Congress preoccupied with partisan politics, and the Great Recession wreaking havoc on our net worth. But do those of us who aren’t facing imminent retirement really care?
Probably not, especially in a non-election year. We simply have too many other, more immediate (and perhaps less boring) issues to deal with – from how to find a job in a down economy to vacation affordability to whether or not Robert Griffin III will start Week 1.
Assessing the Current State of Financial Planning
That should come as no surprise either, given our overall lack of financial literacy and apparent aversion to strategic planning. For example, only two in five adults keep a budget and more than a quarter of us don’t pay our bills on time, according to the National Foundation for Credit Counseling. How, then, can we even begin to worry about retirement?
To be fair, most of us could stand for a bit of improvement in a variety of different aspects of money management. Just consider the fact that we emerged from the recession with plastic in hand, racking up more than $82 billion in credit card debt over the past two years and putting ourselves on pace to add nearly $47 billion more this year. But, as a number of leading financial planning experts recently told WalletHub, procrastination and a lack of specific spending/saving plans are the enemies of a secure retirement.
Social Security in Jeopardy
A sizable segment of folks – 38%, according to a 2011 Yahoo Finance poll – merely “plan” to live off Social Security in retirement. And therein lies the rub. Social Security is running out of money. In 2010 the program operated at a deficit for the first time in decades, and while it was able to leverage trust funds to meet its $49 billion shortfall, Social Security’s reserves are due to run out by 2033 (or even sooner, depending on whom you ask).
Social Security is funded primarily through payroll taxes, and while there were roughly 16 workers paying for each retiree’s benefits in 1950, that number shrank to 3.3 workers per retiree in 2010 and is expected to fall to a 2.4 - 1 ratio by 2025, according to government statistics. In other words, the math doesn’t quite add up for future generations. We aren’t saving enough on our own, the government is cash-strapped, and many folks won’t even fully realize their predicament until they find themselves continuing to work into their 70s or 80s, rather than on a beach somewhere.
The good news is that while the average person may worry very little about the fate of federal retirement benefits, there are a number of very smart people who get paid to do so. We at WalletHub reached out to a number of them for ideas about the types of policy changes Congress can implement in order to improve our retirement outlook.
So, check out what the following experts had to say and maybe even drop a line to one of your representatives if you like any of their ideas.
Ask the Experts