Reuters: Why you may retire in poverty

[hay rick]

21. The retirement problem is an extension of the incomes problem.

Median incomes have been declining which in turn has decimated the savings that would otherwise go into defined contribution plans. From the article:

What about our system of tax-advantaged retirement savings - chiefly 401(k) and Individual Retirement Accounts (IRAs)? Will they come to the rescue? Perhaps for affluent households. But they are just not getting the job done for the vast middle.

Just 14 percent of households report they expect to have enough money to live comfortably in retirement, according to the Employee Benefit Research Institute. Sixty percent of households tell EBRI that the total value of their savings and investments - excluding their homes - is less than $25,000.

The disappearing defined benefit pensions are disappearing both in number and in solvency. A recent story here: http://www.businessinsurance.com/article/20120709/NEWS03/120709911

Before the housing/financial crisis, static and declining incomes were disguised by consumption based on borrowing financed by inflated home equity values. That option has been exhausted. Faced with a recalcitrant Congress, the Obama administration turned to the payroll tax holiday as a means of propping up demand. So now we are depleting Social Security's Trust Fund to compensate for inadequate incomes. We are eating our seed corn.

The approaching "fiscal cliff" should provide a lovely bipartisan opportunity for the continuing attack on American's incomes and retirement opportunities.