You might have to work forever: The honest reality about Social Security and retirement [View all]

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http://www.salon.com/2015/01/03/you_might_have_to_work_forever_the_honest_reality_about_social_security_and_retirement/


Gary Cole and Ron Livingston in "Office Space" (Credit: Twentieth Century Fox)

Just 30 years ago, most American workers were able to stop working in their early sixties and enjoy a long and comfortable retirement. This “golden age” of retirement security reflected the culmination of efforts that started more than a century ago when employers first set up pensions. Gradually, over decades, we built an effective system with Social Security and Medicare as the universal foundation and traditional pensions—where the employer was responsible for all the saving and investment decisions—providing a solid supplement for about half the workforce. The increasing provision of retirement support allowed people to retire earlier and earlier.

This brief golden age is now over. Because of economic and demographic developments, our retirement income systems are contracting just as our need for retirement income is growing. On the income side, Social Security is replacing less of our preretirement income; traditional defined benefit pension plans have been displaced by 401(k)s with modest balances; and employers are dropping retiree health benefits. On the needs side, longer lifespans, rising health care costs, and low interest rates all require a much bigger nest egg to maintain our standard of living. The result of all these changes is that millions of us will not have enough money for the comfortable retirement that our parents and grandparents enjoyed.

If we do not recognize that we are veering off the road and take corrective action soon, millions of retirees will find that they are too old to return to work and have too little in savings—with no one to turn to for help. If we fail to recognize the problems and provide sensible solutions—now, when we can—history will judge us harshly. Millions of retirees will ask: “Why didn’t anybody warn us?” Or, “You could see it coming! Why did you fail to do what was needed to be done to protect us?”

We hope this book—a little like Paul Revere’s famous ride in 1775—will help raise the alarm and get government leaders, corporate executives, and individual workers thinking and talking about how to solve America’s impending retirement crisis. We propose a number of specific and doable adjustments to get us back on the road and heading safely to our intended destination.