At Work

Creating a culture of saving?

Don’t bet on it. What we need is a culture of prudent spending and living within one’s means. There have been numerous efforts by government to encourage saving for retirement, none have changed much.

Interesting that the “shortfall” described below is attributed in part to modest increases in the Social Security full retirement age. In fact, most advisers suggested delaying SS for as long as possible to boost monthly income and certainly the longer a person works and saves the better off they will be.

Last month, Illi­nois and Cal­i­for­nia be­gan re­quir­ing em­ploy­ers that don’t offer re­tire­ment plans to give em­ploy­ees ac­cess to state-sponsored sav­ings ve­hi­cles, by au­to­mat­i­cally enrolling them in in­di­vidual re­tire­ment ac­counts in­vested in mu­tual funds. Em­ploy­ees are free to opt out.

The goal of the programs is to help shore up the roughly half of Amer­ican house­holds whose stan­dard of liv­ing is at risk of de­clin­ing af­ter re­tire­ment, up from 45% in 2004, ac­cord­ing to Bos­ton Col­lege’s Cen­ter for Re­tire­ment Research.

The short­fall is due to fac­tors in­clud­ing in­suf­ficient sav­ings rates, low in­ter­est rates, ris­ing debt lev­els and the grad­ual in­crease in the age at which peo­ple can claim full So­cial Se­cu­rity benefits. Source: WSJ 12-10-18

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