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The Gig Is Up: Your Retirement Is at Risk

You are forgiven for having bigger headlines to focus on, as these are confusing times. Envisioning 20 to 40 years from now takes a backseat to the day-to-day with so many concerns for the average individual and family. At least half of baby boomers are navigating healthcare costs and lower fixed incomes, Gen Xers are straddling college costs and eldercare, and the millennials starting out are paying for weddings, homes, and childcare costs. It’s a busy day all-in. You likely missed the April 5th Senate subcommittee meeting to discuss the state of retirement security in the U.S.

According to the U.S. Government Accountability Office, about 55% of U.S. households between 55 and 64 years of age have less than US$25,000 in retirement savings, including 41% with zero savings. Some have a defined benefit plan, but 27% have neither retirement savings nor a defined benefit plan. Higher up in the age bracket, between 65 and 74 years of age, we find 52% with no retirement savings. The retirement crisis is upon us. It’s not looming anymore. The crisis is crystal clear.

The current retirement system is decades old and is not representative of today’s worker mobility and mindset, competitive business pressures, financial market anomalies, and economic realities—the list goes on. The U.S. society needs prominent discussion with far more attention to new ideas. Recently, we’ve been reading quite a bit about eliminating the 401(k) tax deduction or the mortgage interest deduction. The words are like that piercing scream a microphone makes when you hold it too close. Everyone moans.

The U.S. is not alone with this issue, but it has been one of the least active in updating its ineffective system. Other countries provide valuable examples the U.S. might pursue—must pursue. Various approaches include unhinging retirement savings from employers (and their priorities and needs), incentivizing citizens, requiring citizens to save (overcoming human nature, consumerism, or a lack of investment education), providing tax incentives for the 99% to accumulate wealth generally (or the government—most citizens—will pay more later), and streamlining conflicting regulations that burden the effort (e.g., multi-employer plans serving small businesses without IRS complications). We must address the segment of the population that can never amass the funds to sustain themselves in retirement (because the country of opportunity knows compassion). Take a look at this video for more information (use Internet Explorer or Microsoft Edge).

Americans are not afraid of working hard; they are afraid of hard work that routinely fails. A new system must help people help themselves find a better gig.