18 March 2010 9 Comments

In a shocking, but not so shocking article for those of us who continue to yell about the broken economy of the United States, CNNMoney talks about the insanely low levels of retirement funds for most Americans.

A few highlights from the article:

The percentage of workers who have less than $10k in retirement savings grew from 39% to 43% in 2010

Workers who have less than $1k jumped to 27% from 20%

Factor in unemployment, health care costs, the fact that most Americans are underwater on their homes, insane debt levels, the government is broke, etc. and it all adds up to a simply depressing situation. And, you’re buying stocks right now?

The way I see it, the typical middle class retirement dream is gone for most people. It just isn’t going to happen for our generation. The below table presents the possible solutions to this horrific retirement savings picture. The problem is that each “solution” comes with a consequence. The last column will tell you how to prepare for this consequence should the corresponding solution be implemented.

Solution Consequence of the Solution Hedge against the Consequence Americans massively increase their savings by astronomical levels The economy tanks because we depend on consumer spending Sell your stocks, pray you don’t lose your job Americans delay retirement and work longer Stubbornly high unemployment because with our ill-structured economy, there simply aren’t enough jobs to go around Build your skill set to make sure you can beat out Grandpa for your current job The government should bailout people who don’t have money for retirement because, after all, everyone deserves to play golf, pop Viagra, and enjoy the sunset years of their life The welfare system collapses amid soaring deficits and high interest rates Pay off your debt, save cash, buy gold The government prints a bunch of money to pay for people’s retirements! Massive inflation Don’t pay off your debt, buy gold

Am I reading this wrong? Please set me straight if I am.

As I ponder the future for the average 20-something American, I’m not sure if I should be excited about the future since it’s undoubtedly going to be interesting, or if I should stock up on guns and food, or if I should just cry. Either way, we’re going into uncharted territory.

If you’re not too depressed, read my post from yesterday entitled America: Land of the Unsustainable. This should complete the one-two punch to ruin your day. God bless.