If your retirement savings is not where it needs to be, you're not alone. In fact, most of America might be in the same boat. A new global pension index that examines the retirement plans of 47 countries ranks the U.S. 22nd with a grade of C+. Specifically, the report notes Americans' reliance on 401(k)s, individual retirement accounts, and social security, all of which have long-term reliability and solvency issues. "I'm actually surprised it's a C+ and not a D or F," says Richard Rosso, certified financial planner. "Only because our system is dependent on the individual to absorb all the risk to save for retirement."
Rosso tells KTRH the IRA/401(k)-based system has moved retirement from a secure, untouchable nest egg to a volatile piggy bank that can be raided or neglected. Indeed, during the financial strains of the COVID pandemic, many younger adults abandoned saving for retirement altogether. "Not only that, Congress keeps putting into place opportunities for what we call leakage," says Rosso. "Like, I can take out money for a so-called emergency situation, or I can take money out and not be penalized for buying a home."
"It's no wonder that the median 401(k) balance for someone in their 50s right now is $57,000."
The solution to this retirement crunch is two-fold. First, Rosso believes we need better financial literacy when it comes to saving for retirement. But most importantly, we need a better, more secure, more universal system. "I think we need some form of pension system, that is public and private working together," he says. "And there's money that comes out of your paycheck, just like it would for a company-based plan, but it is put into a pension for every U.S. worker."
"Your retirement should be a lock box, not a piece of Swiss cheese."
Photo: EyeEm