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, IlliĀ­nois and CalĀ­iĀ­forĀ­nia beĀ­gan reĀ­quirĀ­ing emĀ­ployĀ­ers that donā€™t offer reĀ­tireĀ­ment plans to give emĀ­ployĀ­ees acĀ­cess to state-sponsored savĀ­ings veĀ­hiĀ­cles, by auĀ­toĀ­matĀ­iĀ­cally enrolling them in inĀ­diĀ­vidual reĀ­tireĀ­ment acĀ­counts inĀ­vested in muĀ­tual funds. EmĀ­ployĀ­ees are free to opt out.

The goal of the programs is to help shore up the roughly half of AmerĀ­ican houseĀ­holds whose stanĀ­dard of livĀ­ing is at risk of deĀ­clinĀ­ing afĀ­ter reĀ­tireĀ­ment, up from 45% in 2004, acĀ­cordĀ­ing to BosĀ­ton ColĀ­legeā€™s CenĀ­ter for ReĀ­tireĀ­ment Research.

The shortĀ­fall is due to facĀ­tors inĀ­cludĀ­ing inĀ­sufĀ­ficient savĀ­ings rates, low inĀ­terĀ­est rates, risĀ­ing debt levĀ­els and the gradĀ­ual inĀ­crease in the age at which peoĀ­ple can claim full SoĀ­cial SeĀ­cuĀ­rity benefits. Source: WSJ 12-10-18

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