Many experts warn that Social Security’s OASI trust fund may be depleted by 2033, only able to pay 77% of promised benefits without Congressional action. However, Andrew Biggs believes a retirement crisis is unlikely, citing data showing retirees are financially better off than perceived. Retirement planning remains crucial amidst these discussions.
Biggs, a senior fellow at the American Enterprise Institute, argues that retirement crisis narratives are flawed, noting retirement savings and incomes are generally stable. Research shows only 5% of retirees struggle financially, with many actually faring better than expected without formal retirement plans. Addressing real issues is key to ensuring financial security in retirement.
Despite concerns over retirement saving, data suggests a more positive outlook. Recent studies indicate that 88% of Americans approaching retirement have some form of retirement savings, debunking misconceptions that many are unprepared. Biggs emphasizes the importance of accurate data to dispel myths about retirement savings and financial security. Many Americans may be more prepared for retirement than they think, creating a significant gap in worry. Concerns about 401(k) plans falling short are common, with only about half of US workers having access to employer-sponsored plans. However, coverage and participation rates differ, with 72% offered retirement plans at work, and over half participating.
Household surveys showing low coverage rates may be faulty, as many people inaccurately report their retirement plan status. The real crisis lies in governmental funding gaps, where Congress must address long-term financial issues. Advice for retirement planning includes saving more in 401(k)s to prepare for potential tax increases or benefit reductions.
Retirement expert Robert Powell suggests saving an extra percentage point or two in your 401(k) annually to prepare for Social Security’s financing problems. By adjusting contributions based on potential tax increases or benefit reductions, individuals can protect themselves against future uncertainties. Get more retirement advice on Decoding Retirement with Robert Powell. 1. The stock market surged today, with the Dow Jones Industrial Average closing up 300 points. Investors reacted positively to news of a potential trade deal between the US and China, boosting confidence in the market.
2. A new study released by the CDC found that the flu vaccine this year is only 45% effective in preventing the virus. Health officials are urging individuals to still get vaccinated, as it can reduce the severity of symptoms and prevent hospitalization.
3. The United Nations announced that global carbon emissions hit a record high in 2018, despite efforts to reduce climate change. The report highlights the urgent need for countries to take more aggressive action to curb greenhouse gas emissions and protect the environment.
4. Apple unveiled its latest iPhone model, the iPhone 11, featuring improved camera capabilities and performance. The tech giant also introduced the Apple Watch Series 5, which includes new health and fitness features to appeal to a wider consumer base.
5. The Federal Reserve cut interest rates for the second time this year, citing concerns over a slowing economy. The move is aimed at boosting consumer spending and investment, but some economists warn that it may not be enough to prevent a recession.
Read more at Yahoo Finance: No crisis after all? Why Americans might be more prepared for retirement than you think.