Will pre-boomers find retirement worry-free?
We worked, we saved and we believed retirement could be a relatively stable period for us. Boy, were we wrong. The lose of value in our pension accounts, low returns on the investments we still had, home prices falling, freezing of Social Security benefits and severe cut backs in Medicare add up to fear of financial insecurity for many of us born between 1930 and 1945. On top of that, the boomers will be joining us soon as they start turning 65 next year.
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Fear does not necessarily relate to reality. However, there are many warning signs as we travel the road to the next phase of life. Some of these facts may suggest we are on the threshold of a pending crisis. America’s top 100 corporations were found to have pension plans that were underfunded by over $200 billion. The number of pension funds considered at risk inside falling companies has tripled. And, in the last year, a quarter of those in the workforce who were ready to retire have put it off until later.
Government workers are usually guaranteed that any shortfall in their pension funds will be made good by the taxpayers. Financially strapped states and local governments are revisiting this practice and are making efforts to renegotiate labor contracts, but this will be fought to the bitter end by the unions. Unfortunately, the general public believes these workers should not be rescued at the expense of taxpayers. It is unlikely that retired government workers will be affected, but younger ones have plenty to worry about.
Some 60% of non-retired Americans believe Social Security benefits will not be available to them when they stop working. They have good reason to believe this, since this is the first year when Social Security will pay out more than it takes in; this had been projected to occur in 2016. Currently 35% of those 65+ depend solely on these benefits for their retirement income. But the situation will not improve because the number of workers paying for each retiree is 3.3 and will worsen by 2025 to just 2 workers for each one receiving Social Security.
The ever-increasing interest costs on the national debt coupled with the rise in spending for entitlements means that by 2019 more than 90 cents out of every dollar in federal revenue will be required to support Social Security and Medicare, as we know it. If we ignore these disturbing facts, each of us is headed for financial disaster as the United States goes bankrupt. This can’t be allowed to happen to the greatest country on earth.
It is imperative that we start a national debate about all entitlement programs. Our elected official will be required to state their positions and we will demand that they listen to our thoughts. The problem won’t be fixed overnight, but a dialogue can be established. Through this process, we will get to know what the politicians believe and what their willing to do. Then, we can decide who will represent us in the future.
In the meantime, stay calm. Help others needier than you. And, be sure to be of service to your family, friends and community. This sure beats worrying.
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