Beech Tree News Network

As a retiree, I depend on my retirement funds to pay the monthly bills. Recently, I’ve read many articles indicating that most retirement pension funds in the United States are less dependable than we would like. This seems to be a growing problem.

Edward Siedle, in “The Greatest Retirement Crisis in American History” (http://www.forbes.com/sites/edwardsiedle/2013/03/20/the-greatest-retirem...), stated that the average 401(k) balance for 65 year olds is estimated at $25,000. Siedle predicted that inadequate retirement funds will cause the following “waves” in our society:
•    Wave 1: Retirees Come Back To Work
•    Wave 2: Workers Delay Full Retirement
•    Wave 3: Full Retirement Is Unachievable
•    Wave 4: Drowning (The majority will face a lack of savings, a lack of employment possibilities, and failing health.)
Siedle further noted that our elected officials are not preparing for the coming retirement crisis.

A recent report, the Melbourne Mercer Global Pension Index, reviewed the retirement systems of 25 countries. The report considered each country’s retirement income system (adequacy, sustainability and integrity) using more than 40 indicators. This study confirmed that a great diversity exists between the systems around the world. The resulting “grades” from this study are listed below:
•    A – Denmark, Netherlands:
A first-class, robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.
•    B+ – Australia
•    B – Sweden, Switzerland, Finland, Canada, Chile, UK: 
A system that has a sound structure with many good features, but also has areas needing improvement which differentiate it from an A-grade system.
•    C+ – Singapore, Ireland, Germany
•    C – France, USA, Poland, South Africa, Brazil, Austria, Mexico, Italy: 
A system that has some good features, but also has major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned.
•    D – Indonesia, China, Japan, South Korea, India: 
A system that has some desirable features, but also has major weaknesses and/or omissions that need to be addressed. Without these improvements, its efficacy and sustainability are in doubt.
•    E – None in this study: 
A poor system that may be in the early stages of development or non-existent.
Additionally, this report stated that “the overall index value for the American system could be increased by:
•    raising the minimum pension for low-income pensioners,
•    adjusting the level of mandatory contributions to increase the net replacement for median-income earners,
•    improving the vesting of benefits for all plan members and maintaining the real value of retained benefits through to retirement,
•    reducing pre-retirement leakage by further limiting the access to funds before retirement,
•    introducing a requirement that part of the retirement benefit must be taken as an income stream”
(http://www.globalpensionindex.com/wp-content/uploads/Melbourne-Mercer-Gl...).

Ron Lewis, former member of the United States House of Representatives, said, “Financial literacy is an issue that should command our attention because many Americans are not adequately organizing finances for their education, healthcare and retirement” (http://www.brainyquote.com/quotes/keywords/retirement.html). I don’t have the solution for any of these problems. But, I believe the greatest nation in the world could find a solution to the growing retirement pension fund problem in the United States – before it’s a crisis.