Government Depdendence: Americans Aren’t Saving For Retirement


“Three quarters of near retirees (ages 50 to 64) have annual incomes below $52,201, with an average total retirement account balance of $26,395,” reports the Schwartz Center for Economic Analysis. “When stretched out into an annuity over an average retirement lifetime, this sum does not provide a significant addition to a monthly Social Security benefit. Further, the median value of retirement account balances for half of near retirees is zero, meaning that over half of this group has no retirement savings.”

The Social Security and Medicare programs are intended to be social safety nets which provide health care and financial stability to the nation’s elderly. But safety nets promote risky behavior, in this instance it’s promoting a lifestyle wherein Americans aren’t preparing to provide for themselves in retirement.

As we can see from these numbers, Americans aren’t saving for their own retirements, no doubt operating under the assumption that they’ll be able to lean on the government for help.

Meanwhile the Social Security program is in deficit right now, paying out more in benefits than it receives in revenues, and there is no trust fund because the government spent that money a long time ago.

Medicare, too, is teetering toward insolvency with the programs trustees expecting it to begin operating in the red by 2024.

So what we have is a tidal wave of retiring Americans, unprepared to care for themselves in their declining years and expectant of a raft of government benefits, rushing toward entitlement programs that are struggling to provide benefits for those already enrolled.

And the politicians are afraid to do anything about any of this because in politics if you talk about this stuff you’re accused of wanting to push the elderly off a cliff.

But the people for whom this news is the worst aren’t those near retirement. It’s those who will be in the work force for decades yet to come who will be tasked with supporting not only the heavy burden of our existing entitlement programs, as they try to scrape enough money together to provide for their own retirements, but an expansion of those programs to provide for a generation of people who couldn’t be bothered to save for themselves.

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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  • robert108

    How much is the average retirement fund for the typical public unionist? This is where our debt can be cut, by reining in those ‘defined benefit” plans.

    • Rob

      I don’t disagree that pension reforms are needed, but that doesn’t exactly excuse the average American worker from saving for their own retirement.

      • robert108

        When large chunks of your earnings are taken to fund those gold-plated “defined benefit” plans for the public unionists at all levels, how much do you have left for your own savings? In addition, keeping the interest rates artificially low to cover up the inflationary effects of Democrat tax and spend policies makes saving your money a joke.

        • Rob

          Again, not disagreeing. That’s a problem. But it’s not like we could suddenly afford Social Security if there wasn’t a pension issue.

          • robert108

            Never said anything would happen “suddenly”, so am puzzled as to why you try to distract with that. It goes to lower and fewer taxes to drain money from the taxpayers to pay for those defined benefit plans. That’s the direct effect, but the indirect effect is to lower the standards for retirement to realistic levels, so that all the markets patronized by retirees are less expensive. That’s how economics works.

          • dakotacyr

            Perhaps you can what the average pension is for a public worker. take ND for instance. How much? go ahead, look it up. Ah hell, the average teacher pension is $1603 a month. Wow! that’s gold-plated alright.

  • Kevin Flanagan

    This won’t end well.

  • Gern Blanston

    When Libs see this story they instinctively beleive we need t otax the rich more so we can increase benefits to those soon to retire.

  • Emil Kashuntz

    How can ordinary people retire? The income of the rich has increased by 200% since 1978, meanwhile the wages of working people have declined by 12%. The Republicans cannot dispute this. Tax policies that favor the rich are destroying the country and changing the country into a third world banana republic. Wealthy Americans have bough the Republican congressmen they need, and Ruport Murdock has used Fox news to promote his lies. With Rush feeding the Hoopleheads fantisies all day we are doomed. Thanks to the Republicans we are returning to an aristocracy of the rich, by the rich and for the rich, and right here on this blog you see simple minded dingers buying the whole story every day. How do you get dingers to work against their own interest? Dingers are like religious people, they just believe, facts don’t phase them.

    • Rob

      Just because some people are rich doesn’t mean there’s less wealth for others. That’s not how the economy works.

    • robert108

      The achievers grow the economy for us all. Commies like you attack the achievers, making less for all of us.

    • jl

      “Tax policies favor the rich..” Really? How? When the top1% pays 40% of the total income taxes and the bottom 50% pays next to nothing, that hardly favors the rich. But thanks for the detailed, reasoned and well-thought out…oh, wait, you’re a Liberal. If there’s anybody that facts don’t phase, it would be you.

  • RCND

    Its not the peoples fault. They were too busy living beyond their means all their lives to even think about saving for retirement, let alone actually doing it.

  • Waski_the_Squirrel

    I’m very bitter that I am forced to put my money into a state pension (TFFR) as well as Social Security. Just recently, the legislature increased the amount I am forced to put into the pension because they know it has problems which will be worse down the road. I look at all that money that I could be investing myself, and instead I’m forced to give it to 2 programs I don’t trust.

    So, in addition to these two programs, I shell out even more money to pay for some private sector retirement programs. I lost a lot of money in them for a few years, but now they’re replenished and then some.

    I hear a lot about the greed of public sector employees getting incredible pensions. What people forget is that these public sector employees are forced to pay into them. They are incredible because government promised pensions instead of wages to save money in the short term. We’re not reaping the long-term consequences: these pensions are not sustainable and public sector employees, union or not, cannot escape them. I would love to be able to invest the twenty-some percent stolen for state retirement into my own private retirement. I am not allowed that option.

    What I really fear down the road is that as public pension plans fail, the private ones such at the IRAs, the 401K, and the 403B will be seized and forced into the government pension. If that happens, even my backup plan will be useless. All of those who did not prepare for retirement will be able to take from those, like me, who sacrifice during our working years to prepare for retirement. My own solution would be more heartless: if you can’t afford to retire, don’t.

    • Rob

      I’ve never understood why teachers are so opposed to reforms that would give them more control over how their money is invested.

      I’m with you. I’d rather be in charge of my own investments, in charge of my own destiny, than to be trusting some panel of bureaucrats to investment my retirement.

      • dakotacyr

        Because they know they would end up like most other’s 401k, with very little in them, exorbitant fees and at the whim of the market. The vast majority of Americans haven’t even made up what they lost 4 years ago.

    • dakota

      What a bunch of hooey! The average teacher pension in North Dakota is $1603 a month or $19,236, not so incredible. The pension is sustainable as long as both participants, the employee and the employer pay their contributions and the funds are managed well. The TFFR had a bad spell back in 2008-09 just as every other pension system. Those in 401ks fared even worse.

      You have absolutely no proof that the pension plans will be worse down the road. History shows otherwise. So be bitter if you want, but you will have your retirement and Social security. If you put the pension to a vote, you would lose.

      • Waski_the_Squirrel

        I don’t want a vote. I want the freedom to choose. That freedom includes the freedom to make the wrong choice and then bear the consequences. I’m not allowed that freedom.

        Remember, in the long run, the market wins. In 2008-2009, my retirement lost a pile of money. I don’t care. I’m playing for the long term. If history is any guide, I’ll gain in the end.

  • SigFan

    But for generations we’ve been told that Uncle-Daddy Sam will take care of us – cradle to grave baby! It’s the liberal way.

    • Rob

      That’s exactly right. Americans have been sold on the idea that they don’t have to prepare for retirement, because Uncle Sam has a nice hammock waiting for them.

      • realitybasedbob

        Please link us to that literature.

        • Onslaught1066

          Obama built the infrastructure, right?

          Well then, he must be in charge of “Big Hammock”, right?

          “If you’ve got a business — you didn’t build that. Somebody else made that happen.” B. O. plenty, 7-13-2012

      • dakotacyr

        I think people know they need to plan for retirement, but for some reason, Wall street and the banks decided to play russian roulette with their investments. go figure.

  • OldConserv

    If it were not for last year’s flood and my need to raid my retirement account to pay for a new home, I would have fallen into the 75 to 100 percentile. I have absolutely no expectation that by the time I’m 67 Social Security benefits would even be available to me. So I’m contributing to my 401k at the maximum rate.
    The thing that frightens me the most however is that there is already an element within Congress and the Obama regime that is scheming to take over private retirement accounts. And if I get even the faintest whisper that they are about to pull the trigger on that, I’m going to withdraw every penny, take the government early withdrawal penalties in the shorts, buy the strongest safe I can buy, arm myself heavily, and wait for the bastards to try and take the rest from me.
    And Emil, just an FYI, I’m not a rich man. I’m a working class man. My wages have not been on the decline. In fact, my wages have steadily grown over the past yen years and with each increase, I’ve bumped my savings rate as much as I could within the means of my living expenses. Not one rich man has taken money out of my pocket to increase his own income. The stone cold truth is that because I work for a wealthy man, my fortunes have increased because his fortunes increased. So quit your damn whining, get off your ass and go out and find yourself a better job.

  • Emil Kashuntz

    Now that one percent of the population has 20 percent of the wealth, and the bottom 50% only has one percent, perhaps the silly worshipers of tax breaks for the rich will see the result. The country simply cannot function when the rich take everything and drive down the wages of the average American.

  • VocalYokel

    I just figure that Obamacare’s death panels will handle my ‘retirement.’