Over the past few years it’s become painfully obvious that an overwhelming majority of retirees don’t have enough money saved to sustain their lifestyle. In the below infographic you’ll find some shocking facts that, for those still in their working years, provide valuable lessons on what not to do. A couple to point out:
– One out of three working Americans does not have retirement savings beyond social security.
– Research completed by the University of Chicago and Kellogg School of Management calculated the pension liability of all 50 U.S. states, finding the states faced $5.17 trillion in pension payouts….sadly the current combined fund only has $1.94 trillion set aside for pensions.
Unfortunately the bottom portion of this graphic urges Americans to continue making the same mistakes made by baby boomers and soon to be retirees. Namely, put all your retirement savings dollars at risk in government sponsored 401(k) plans and IRA plans.
If the past 10 years is any indication of future performance, betting on a 7% growth every year is overly optimistic in my opinion. Over the past 10 years market performance has been painful at best. On December 31, 1999 the S&P closed at 1469.25. On August 22 2011 the S&P closed at 1123.82….an average loss of -29 points per year. Do you have another 10 years to see if the market makes up for past losses? Maybe the better question, do you have the ability to stomach the fact that your money is completely out of your control?
We all know the definition of insanity – isn’t it about time to shift our thinking?