retirementIn a white paper published on 10/18/17, the United States Government Accountability Office (U.S. GAO) calls for a comprehensive re-evaluation of our nation’s retirement system.

Retirement security is something Americans are universally concerned about. Even my clients who have millions are worried they will run out of money before they run out of time. I can’t imagine what it’s like for the vast majority of folks who have little or no retirement savings.

Our current system assumes our retirement income will come from 3 basic sources in roughly 3 equal parts: Social Security, an employer sponsored retirement plan, and personal savings. This system is FAILING the majority of Americans, especially now that the employer sponsored retirement plan portion of the equation is 10X more likely to be a 401k than the pensions our parents and grandparents relied on.

Collectively, we just aren’t saving enough for retirement. Social Security is only 75% solvent and will require some simple-but-difficult to attain tweaks in order to regain full solvency. Neither individuals nor companies are saving enough in employer sponsored plans, and we are totally failing on the personal savings front.

It is a tragedy that in a country as wealthy as ours, so many of our elders and soon to be elders will suffer the challenges of poverty.  It is a crisis that we must work together to resolve. We should act through our elected officials to change policy in order to support greater retirement security, despite the fact that it can’t/won’t happen fast enough to benefit many of us in the work force today. I doubt the minor policy tweaks that are feasible in our politically divided country will be enough to change the course of retirement security for most Americans entering retirement now or 25 years  from now, which is when my wife and I plan to retire.

Although the national retirement income gap is not something we can hope to resolve before we reach full retirement age, it is a problem we can solve individually. There are simple steps we can take to effect better retirement outcomes in our own lives, our families’ lives, and, the lives of other families in our communities.

Here are three concrete things you can do to improve the long-term financial prospects of those closest to you:

  • SAVE more (much more) in both your employer’s retirement plan and in your personal savings account
  • As you save more, consider investing a greater proportion of those savings into the great companies of the US and the world. Owning equities/stocks has historically been a very good way to build wealth over time, although you do have to be patient (sit still/do nothing) when markets go down.
  • If you are an employer, you have the opportunity to enhance access to retirement savings vehicles by setting up a retirement plan (SIMPLE, SEP, 401k, etc.) for your employees. DO SO! Then, educate them on how to use it and maybe even nudge your employees to save more by matching their savings or by offering profit sharing.

When it comes to retirement savings, we’re in this together. Let’s each do our part to look after ourselves and our fellow citizens.