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American Dream: 43% Of Workers Have Less Than $10k For Retirement

18 March 2010 9 Comments

In a shocking, but not so shocking article for those of us who continue to yell about the broken economy of the United States, CNNMoney talks about the insanely low levels of retirement funds for most Americans.

A few highlights from the article:

  • The percentage of workers who have less than $10k in retirement savings grew from 39% to 43% in 2010
  • Workers who have less than $1k jumped to 27% from 20%

Factor in unemployment, health care costs, the fact that most Americans are underwater on their homes, insane debt levels, the government is broke, etc. and it all adds up to a simply depressing situation.  And, you’re buying stocks right now?

The way I see it, the typical middle class retirement dream is gone for most people.  It just isn’t going to happen for our generation.  The below table presents the possible solutions to this horrific retirement savings picture.  The problem is that each “solution” comes with a consequence.  The last column will tell you how to prepare for this consequence should the corresponding solution be implemented.

Solution Consequence of the Solution Hedge against the Consequence
Americans massively increase their savings by astronomical levels The economy tanks because we depend on consumer spending Sell your stocks, pray you don’t lose your job
Americans delay retirement and work longer Stubbornly high unemployment because with our ill-structured economy, there simply aren’t enough jobs to go around Build your skill set to make sure you can beat out Grandpa for your current job
The government should bailout people who don’t have money for retirement because, after all, everyone deserves to play golf, pop Viagra, and enjoy the sunset years of their life The welfare system collapses amid soaring deficits and high interest rates Pay off your debt, save cash, buy gold
The government prints a bunch of money to pay for people’s retirements! Massive inflation Don’t pay off your debt, buy gold

Am I reading this wrong?  Please set me straight if I am.

As I ponder the future for the average 20-something American, I’m not sure if I should be excited about the future since it’s undoubtedly going to be interesting, or if I should stock up on guns and food, or if I should just cry. Either way, we’re going into uncharted territory.

If you’re not too depressed, read my post from yesterday entitled America: Land of the Unsustainable.  This should complete the one-two punch to ruin your day.  God bless.

9 Comments »

  • UptownDenver said:

    When you are looking to the future the clearest view is behind you…

    I see two possibilities…

    1. The US comes out of this whole problem doing just fine and continues to be the hegemonic power it has been for the last century.
    2. The US can't sustain the amount of debt (private and public) that we have gotten ourselves into and falls down the global ladder.

    Either way, I just don't see our society crumbling around us. I see something more along the lines of what happened to the UK when their empire fell, they aren't the big dog anymore but they are living well. I see a combination of solution 2 and 3 happening. Gov. will step in to help alleviate the problem and people will be forced to work longer. I see this leading to more parents living with the kids in old age and that means our generation (20's-30's) should be ready to welcome the old folks into our lives.

    Now I don't know about you, but my parents living with me would really make me focus on saving for the future! Society is a lot like the stock market, as things change society will react and come to some sort of balance. It might be a painful correction and I would encourage saving, paying down debt, and buying some gold, but I wouldn't worry about the guns and food quite yet.

  • 20smoney said:

    Good points! I agree and think there is a massive standard of living adjustment coming, although it's not nearly the end of the world 🙂 might be good for some people.

  • jason said:

    "I see this leading to more parents living with the kids in old age and that means our generation (20's-30's) should be ready to welcome the old folks into our lives. "

    I, for one, have no problem with this happening. I would simply view it as returning the favor of my fathers lifetime of sacrifice. I'm not sure when it became more common for every member of a family to own their own home and cut all ties.

  • 20smoney said:

    I agree!

  • 4sightfund said:

    I can't really comment on the guns and food thing, but there definitely is a solution to the issues that are being raised. I'm sure we can all agree on a couple things: 1) a fundamental problem that has and will continue to perpetuate our current state of ill-affairs is that mom, dad, or at least some of their friends didn't save enough over their working lives. 2) the problems with the average household balance sheet is being exacerbated by current financial market trends (which are perfectly natural by the way). And even how mom and dad saved has its fundamental flaws.

  • 4sightfund said:

    I don't think however that our generation (and this is coming from a 22 yr old) should just lay down and die before we've even had our go at the wheel. And I also think that the solutions to the problems that we're gonna be inheriting are gonna have to come from us. For instance, me and a buddy have been working on an idea using hybrid portfolio theory concepts to structure a new type of savings vehicle. We're looking to design a portfolio management approach that replicates a call option. We're not expecting the types of innovations that would help our generation out of this mess we're in to come from Wall Street, its gonna come out of some dorm room or basement or garage. But then again that's always been the way America innovates.

  • 20smoney said:

    Interesting thoughts. I'd be interested in hearing more of your insights!

  • Redeeming Riches said:

    I think another solution is to try to diversify your income sources as much as possible so that if you do lose your job, you at least have some supplemental cash coming in! Good post!

  • John Paulson said:

    Did you know how much SAC Capital returned last year? Thanks