Saving Young People From Themselves
Steven Rattner, NYT
APRIL 12, 2014
RETIREMENT is a financial obligation that today’s younger generations are not handling well. That may be through no fault of their own — they suffer from lower incomes, after being adjusted for inflation, and student debt that makes it a struggle to save. But regardless of the reason, the failure to save for retirement is setting up Americans in their 20s and early 30s for financially stressed golden years.
The statistics are startling: Only 43 percent of eligible workers under 25, and 62 percent of those between 25 and 34 participate in 401(k) plans, compared with 70 percent or more of those over 45. And the young contribute less — 4.3 percent of income for those under 25 and 5.5 percent for ages 25 to 34. In contrast, Americans between 55 and 64 direct 8.7 percent of their incomes to these plans.
Skimpy retirement assets might be manageable if they were being offset by other wealth accumulation. But that hasn’t happened. In fact, adjusted for inflation, members of Gen Y — those born after 1980 — are poorer than their parents were at similar ages.
We should address this looming crisis via a radical restructuring of our retirement plans, including mandated savings.
(More here.)
APRIL 12, 2014
RETIREMENT is a financial obligation that today’s younger generations are not handling well. That may be through no fault of their own — they suffer from lower incomes, after being adjusted for inflation, and student debt that makes it a struggle to save. But regardless of the reason, the failure to save for retirement is setting up Americans in their 20s and early 30s for financially stressed golden years.
The statistics are startling: Only 43 percent of eligible workers under 25, and 62 percent of those between 25 and 34 participate in 401(k) plans, compared with 70 percent or more of those over 45. And the young contribute less — 4.3 percent of income for those under 25 and 5.5 percent for ages 25 to 34. In contrast, Americans between 55 and 64 direct 8.7 percent of their incomes to these plans.
Skimpy retirement assets might be manageable if they were being offset by other wealth accumulation. But that hasn’t happened. In fact, adjusted for inflation, members of Gen Y — those born after 1980 — are poorer than their parents were at similar ages.
We should address this looming crisis via a radical restructuring of our retirement plans, including mandated savings.
(More here.)
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