Marc Abear: Americans are saving more for retirement than ever before, there is no crisis

To The Daily Sun,

A majority of Americans tell pollsters they fear a “retirement crisis.” We fear inadequate savings and incomes in old age. Some argue our system of 401(k)s and IRAs layered on top of a base income from Social Security is a failure.

In 1959, defined benefit pension programs dominated the retirement system. Total retirement plan assets equaled about 26% of total wages and salaries. By 2021, long after emergence of 401(k)s, total retirement plan assets had risen to 412% of total wages and salaries.

The point here is: Americans are saving more for retirement than ever before. Savings of Americans today far exceed the personal preparedness of past U.S. retirees. There is no crisis.

To the extent there is an issue, it is government retirement programs are underfunded. Our politicians have promised more than they have funded. They keep promising free stuff. It creates unrealistic expectations.

The retirement landscape has changed dramatically over the years. The same rules do not apply to government and non-governmental retirement programs. That’s another part of the issue.

The private sector has seen the dawn of traditional pensions plus Social Security. It’s necessary for lawmakers to approach Social Security reform with this in mind.

The U.S. can close coverage gaps by reforming private retirement savings systems and reforming Social Security to focus on low-earning Americans. Isn’t what we need a system which is financially sustainable for generations to come?

The retirement system problems largely lie in government retirement programs. Governments almost uniformly refuse to adequately fund their pension obligations. Countrywide the retirement savings gap is mainly a government pension funding gap.

If readers are concerned with retirement now or in the future they should be paying attention. This subject hits their pocketbook now and in the future.

Marc Abear

Meredith