Retirement revolves around dying BROKE and realizing that the 401k model is a sham for most Americans

The new retirement model means working until you die.  Most Americans are broke and living paycheck to paycheck.  Yet the stock market is near a modern day peak.  What is going on?  Wasn’t the 401k experiment that launched in the early 1980s to replace pensions supposed to be a panacea in terms of building out nest eggs for the masses in their golden years?  That was the idea but unfortunately inflation has eaten away at the standard of living and many Americans simply did not have enough to save when it came to retirement.  We know the drill – sock away X percent a month and after 30 or 40 years you will have seven figures.  Well here we are, nearly 40 years from that experiment and most Americans have little to nothing in their retirement accounts and the pension (a forced 401k in a way) is virtually extinct.  So is dying broke the new retirement model?

Americans have very little saved

This might come as a surprise but most Americans have very little saved when it comes to retirement (assuming they even have retirement savings).  The numbers don’t even look that great after a massive bull market.

Take a look at the figures:

median retirement savings

These are incredibly low numbers across the board.  Essentially the median amount saved for retirement of those 55 and younger is $8,000 at the high-end and down to $480 for those 32 to 37 years of age.  Even at the upper-end of age range the median is $17,000.  That is basically one minor surgery from being bankrupt.

Why are so many Americans broke?  Well the standard of living has simply deteriorated over time and the safety net of pensions for Americans has flat out disappeared:

defined-benefit-pension

That number is now down to about 13 percent of private sector workers that have access to a pension.  So if Americans are not putting money away into stocks that 401k solution is not going to work.  And here we are nearly a full 40 years from that move and most Americans just don’t have money saved.  So the voluntary nature of the 401k just doesn’t seem to work.  If we made Social Security voluntary we’d have homeless shelters the size of major metro cities across every state.  So the benefits of compounding evaporate into thin air if you don’t consistently save.

FURTHER READING ON MONEY NEWS MAGAZINE

  • frankw

    Here’s a major flash for the investors. Workers without jobs don’t/can’t invest. It’s all well and good to talk about hypothetical ways to save, especially if one is fortunate enough to have a steady income, but another matter altogether if putting food on the table and keeping a roof over the kiddies heads takes up all one’s resources.

  • Sam Oconnel

    The 401K was a scam from the get go. A way to FORCE the average guy into the stock market to prop it up while the banks ate away the value through inflation and manipulations.

    Those who did not see it, and the whole scam of government, will end up paying for it. if only they had used the “money” to buy silver at $2 and ounce they would be set for life.

    • NobodysaysBOO

      you are right the 401k matching just never happens, you can get some of your money back but never all.

  • NobodysaysBOO

    WE got LAYOFF notices instead of 401k benefits and NO money.