2011 marks the first year Baby Boomers reach retirement age.
Every year for the next 19 years more and more Americans will find themselves in the position of having to choose between retiring at poverty level or continuing to work beyond age 65.
Right now a whopping 96% of us are unable to retire without being dependent on the government, our kids, or charity.
How did this happen? Why have we been unable to accumulate the money necessary to retire? Here are some reasons: Life expectancy is trending upward dramatically and we are outliving our retirement funds.
We're living much longer than we were just a century ago.
In 1900, life expectancy was 47 years.
In 2003 it was 77 years.
This upward trend is predicted to continue and it's possible that retirement years could soon equal or even exceed working years.
Do you remember when it was a rare achievement to attain age 100? There are now more than 53,000 centenarian Americans according to the 2010 census.
If it's your 100th birthday, Willard Scott probably isn't going to have time to make a big deal about it because you're only one of the hundred-forty-something others who turned 100 today! Retirement plans aren't what they used to be.
In the 1940s, 50s, 60s and early 1970s almost every employer provided defined benefit pension plans for their employees.
These plans typically provided a pension based on a percentage of the employee's income averaged over the last several years prior to retirement.
That percentage normally ranged from 30% to 60% of salary and, combined with Social Security, made for a decent retirement income.
In 1980 a new retirement strategy was introduced, the defined contribution plan or 401(k).
This plan allowed employees to contribute pre-tax money, but with limits to the amount contributed.
And it significantly reduced or eliminated employer contribution.
In most 401(k) plans, investment decisions are made by the employee, and most of us are not trained or experienced in making that type of decision.
The 401(k) as a retirement vehicle has proved to be an abysmal failure.
The stock market averaged a little better than 12% annually in the eight years from 1984 to 2002.
The average 401(k) fund investor netted an average of less than 3% during the same period.
And since these are tax-deferred plans there will be a tax bill due upon withdrawal, just when we're least likely to afford it.
Many of us are smothering under a mountain of debt.
Nearly half of American households are spending more than they're earning, and that is not a recipe for a successful retirement.
Some of us are living paycheck-to-paycheck or (even worse) using credit cards to pay our bills, so there is nothing left to contribute to a retirement fund.
Some of us were counting on our home equity to help fund our retirement, until the real estate market collapsed.
There is no quick or painless fix for this dilemma.
For some of us it's too late, but many of us can avert or repair financial disaster by acting NOW.
Every year for the next 19 years more and more Americans will find themselves in the position of having to choose between retiring at poverty level or continuing to work beyond age 65.
Right now a whopping 96% of us are unable to retire without being dependent on the government, our kids, or charity.
How did this happen? Why have we been unable to accumulate the money necessary to retire? Here are some reasons: Life expectancy is trending upward dramatically and we are outliving our retirement funds.
We're living much longer than we were just a century ago.
In 1900, life expectancy was 47 years.
In 2003 it was 77 years.
This upward trend is predicted to continue and it's possible that retirement years could soon equal or even exceed working years.
Do you remember when it was a rare achievement to attain age 100? There are now more than 53,000 centenarian Americans according to the 2010 census.
If it's your 100th birthday, Willard Scott probably isn't going to have time to make a big deal about it because you're only one of the hundred-forty-something others who turned 100 today! Retirement plans aren't what they used to be.
In the 1940s, 50s, 60s and early 1970s almost every employer provided defined benefit pension plans for their employees.
These plans typically provided a pension based on a percentage of the employee's income averaged over the last several years prior to retirement.
That percentage normally ranged from 30% to 60% of salary and, combined with Social Security, made for a decent retirement income.
In 1980 a new retirement strategy was introduced, the defined contribution plan or 401(k).
This plan allowed employees to contribute pre-tax money, but with limits to the amount contributed.
And it significantly reduced or eliminated employer contribution.
In most 401(k) plans, investment decisions are made by the employee, and most of us are not trained or experienced in making that type of decision.
The 401(k) as a retirement vehicle has proved to be an abysmal failure.
The stock market averaged a little better than 12% annually in the eight years from 1984 to 2002.
The average 401(k) fund investor netted an average of less than 3% during the same period.
And since these are tax-deferred plans there will be a tax bill due upon withdrawal, just when we're least likely to afford it.
Many of us are smothering under a mountain of debt.
Nearly half of American households are spending more than they're earning, and that is not a recipe for a successful retirement.
Some of us are living paycheck-to-paycheck or (even worse) using credit cards to pay our bills, so there is nothing left to contribute to a retirement fund.
Some of us were counting on our home equity to help fund our retirement, until the real estate market collapsed.
There is no quick or painless fix for this dilemma.
For some of us it's too late, but many of us can avert or repair financial disaster by acting NOW.