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Senior Times: Looking ahead to retirement? Look again
By TERRY MAXWELL/Arizona Range News
Two weeks ago, the highly respected Federal Reserve Chairman Alan Greenspan warned that Social Security and Medicare are facing more financial pressures and the government might be promising more than it can deliver as millions of baby boomers are heading for retirement.
"As a nation, we owe it to our retirees to promise only the benefits that can be delivered," Greenspan said in remarks at a Central Bank conference in Jackson Hole, Wyo.
He warned that the elderly could experience trouble in the future. The percentage of the population 65 and over is expected to double by 2035. Seniors will make up about 20 percent of the U.S. population compared to 12 percent today.
"Most political observers and economists expect Social Security to be in a chronic deficit over the long haul. The short falls in the Medicare program will almost surely be much larger and much more difficult to eliminate," Greenspan said.
How concerned should we be about the projected pitfalls ahead for baby boomers in their so-called "golden years"?
People should be very concerned about security in their retirement years, but evidently most Americans are not particularly bothered by the troublesome projections offered by economists.
One in five active participants had less than $5,000 in a 401(k) and many people couldn't cover one year of expenses. Surprisingly, 30 percent of eligible employees do not participate in their 401(k) plans at all.
It is a well-known fact that our retirement system faces the reality of possibly being crushed by an aging population, a federal government that refuses to curtail spending and an abundance of talk and promises with little action.
Due to an earlier effort by Congress to strengthen the Social Security system, most working people have to wait beyond age 65 to get their full Social Security benefits.
The rules are slowly but surely changing, so depending on when you were born, the retirement age for full benefits could be a few months after age 65 up to 67 years of age.
Working Americans born in 1940, for example, must wait until age 65 and a half to get full benefits. Those born in 1950 must wait until age 66 and those born in 1960 or later must wait until age 67. Unless changed by Congress, reduced benefits will still be paid as early as 62 years of age.
When we look at current life-expectancy figures, especially men, one cannot help but wonder if the government keeps adding years to the age requirement for full Social Security benefits so they will only be a few years away from life-expectancy averages for males and females.
In other words, millions of working Americans that paid into Social Security will be unable to collect retirement benefits due to dying in their 60s and early 70s. The age-related savings to the Social Security fund is obvious even to the most casual observer.
To add to the dilemma, millions of American workers cannot depend on a work-related pension now or in the future.
About 25 percent of workers at private companies have only a 401(k) or other type of defined contribution plan and do not have any form of traditional pension, said Craig Copeland, senior research associate for the Employer Benefit Research Institute in Washington D.C.
Another major concern to American workers is the way more employers are cutting or eliminating health care benefits for future retirees as costs continue to climb.
It is becoming more obvious that future retirees will have to work longer and save more than expected if they plan to retire with some financial security in their twilight years of life.
Investment counselors strongly recommend that if you don't have a 401(k), set aside money in an Individual Retirement Account. The maximum contribution this year is $3,000. You can add another $500 if you are 50 or older.
Peachy dandy. But at the risk of sounding trite, many people in Cochise County and throughout America can't put aside anything, and still have a difficult time trying to pay the bills, much less put $3,000 into a retirement fund.
(Editor's Note: Terry Maxwell can be reached at terryMaxwell@m33access.com.)
"As a nation, we owe it to our retirees to promise only the benefits that can be delivered," Greenspan said in remarks at a Central Bank conference in Jackson Hole, Wyo.
He warned that the elderly could experience trouble in the future. The percentage of the population 65 and over is expected to double by 2035. Seniors will make up about 20 percent of the U.S. population compared to 12 percent today.
"Most political observers and economists expect Social Security to be in a chronic deficit over the long haul. The short falls in the Medicare program will almost surely be much larger and much more difficult to eliminate," Greenspan said.
How concerned should we be about the projected pitfalls ahead for baby boomers in their so-called "golden years"?
People should be very concerned about security in their retirement years, but evidently most Americans are not particularly bothered by the troublesome projections offered by economists.
One in five active participants had less than $5,000 in a 401(k) and many people couldn't cover one year of expenses. Surprisingly, 30 percent of eligible employees do not participate in their 401(k) plans at all.
It is a well-known fact that our retirement system faces the reality of possibly being crushed by an aging population, a federal government that refuses to curtail spending and an abundance of talk and promises with little action.
Due to an earlier effort by Congress to strengthen the Social Security system, most working people have to wait beyond age 65 to get their full Social Security benefits.
The rules are slowly but surely changing, so depending on when you were born, the retirement age for full benefits could be a few months after age 65 up to 67 years of age.
Working Americans born in 1940, for example, must wait until age 65 and a half to get full benefits. Those born in 1950 must wait until age 66 and those born in 1960 or later must wait until age 67. Unless changed by Congress, reduced benefits will still be paid as early as 62 years of age.
When we look at current life-expectancy figures, especially men, one cannot help but wonder if the government keeps adding years to the age requirement for full Social Security benefits so they will only be a few years away from life-expectancy averages for males and females.
In other words, millions of working Americans that paid into Social Security will be unable to collect retirement benefits due to dying in their 60s and early 70s. The age-related savings to the Social Security fund is obvious even to the most casual observer.
To add to the dilemma, millions of American workers cannot depend on a work-related pension now or in the future.
About 25 percent of workers at private companies have only a 401(k) or other type of defined contribution plan and do not have any form of traditional pension, said Craig Copeland, senior research associate for the Employer Benefit Research Institute in Washington D.C.
Another major concern to American workers is the way more employers are cutting or eliminating health care benefits for future retirees as costs continue to climb.
It is becoming more obvious that future retirees will have to work longer and save more than expected if they plan to retire with some financial security in their twilight years of life.
Investment counselors strongly recommend that if you don't have a 401(k), set aside money in an Individual Retirement Account. The maximum contribution this year is $3,000. You can add another $500 if you are 50 or older.
Peachy dandy. But at the risk of sounding trite, many people in Cochise County and throughout America can't put aside anything, and still have a difficult time trying to pay the bills, much less put $3,000 into a retirement fund.
(Editor's Note: Terry Maxwell can be reached at terryMaxwell@m33access.com.)
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