Remember when the plan was to pour a percentage of your hard-earned salary into a retirement account, usually supplied by your employer? Who then invested your money with the company’s into a series of funds, stocks and economic stratagems? Which were engineered for failure by rapacious banks, secretive hedge funds and other crooks, gaming the econopocalypse from either side of the class-war divide? Yeah, that plan failed. The new plan? For retirees, Employee Benefits face an uncertain future. I explored the cold economic reality for AlterNet.
[Scott Thill, AlterNet]
The days of quietly retiring with a nest egg built up from years of savings from a long career on the verge of disappearing. For tens of millions of Americans, facing rising costs, shrinking incomes and growing debts they already have disappeared.
“One out of three working Americans does not have retirement savings beyond Social Security, and about 35% of those over 65 rely almost totally on Social Security alone,” Dallas Salisbury, president of the Alliance for Investor Education and the Employee Benefit Research Institute (EBRI) , explained to AlterNet. Depending on how much you received in income and salary during your working life, your social security benefits eligibility, and how much you get back in monthly installments, could possibly be enough for you to live off in your retirement years. But unfortunately, this won’t be the case for everyone. “Of the remaining two-thirds of working Americans that have some retirement savings, 27 percent report less than $1,000, 16 percent between $1,000 and $9,999, 11 percent between $10,000 and $24,999, 12 percent between $25,000-$49,999, and 36 percent $50,000 or more.” Perhaps the most shocking number is that half of Americans have $2,000 or less saved for retirement. If you find yourself with a small amount of retirement money, you could consider taking out a lifetime mortgage. This means that you could take a loan out, which would then be repaid if you moved out of your house to a retirement home or if you passed away. The process is fully explained here. This could potentially give you more money to spend through your retirement.
Crunch the numbers and you end up with a retirement myth, rather than a money-maker. We face a colder economic reality: Not only are there no astronomical retirement returns coming down the financial pike, but what nuts and nest-eggs families have set aside for their futures have been mostly sucked dry. Of course, you can still make money in later years, and many like to continue working after retirement. This just means that there is little to be left to future generations, and they are struggling enough with their own retirement plans.
“Individuals need to follow the advice of the ages,” said Salisbury. “Spend less than you earn by 25 percent, and save for your future. This keeps your lifestyle from getting ahead of your income.”
While saving 1/4 of our shrinking incomes sounds nigh on impossible in this economic climate, many are watching their savings getting squandered by bad fund managers. One retirement Ponzi scheme starting to worry the Senate Special Committee on Aging, according to an aide who asked not to be named, are target-date funds, a financial instrument . They’re basically mutual funds that try to play equities and stocks in their early years before settling into more conservative investments like cash and fixed-income before maturing, so as not to give their investors heart attacks on the date of their retirement. As imagined, given our wheezing global economy, target-date funds are leaking money to managers who are charging insane fees before the house of cards crashes. In July, the SEC proposed new rules to make target-date funds more transparent, but lately the SEC has been proposing much while the banksters and executives that really run the country have continued to fund everything from Barack Obama’s election to the Republican Party itself.
In related news, the Supreme Court ruled that corporations are free to spend, pardon the pun, as much as they want to buy political candidates In other words, even if your target-date fund survives the banksters’ scams by the time it finally matures, there’s no guarantee it can’t be downsized by them at a moment’s notice. To quote Wikipedia, “almost all target date funds do not have any guarantee.” The banksters and the SEC know it, and now so do you. MORE @ ALTERNET
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