April 28, 2014
NO ONE HAS IT HARDER THAN THEIR FATHER DID:
Are We Under-Saving for Retirement? (Robert Samuelson - April 28, 2014, Washington Post)
As millions of baby boomers pass their mid-60s, the specter of widespread under-saving has taken hold. Huge numbers of present and future retirees will exhaust their savings before they die. Mass hardship looms, even as the costs of an aging society already weigh on the young and middle-aged. It's a scary vision. But is it likely? Probably not.Typical retirees are hardly bereft. In 2010, roughly 80 percent of households 65 to 74 owned their homes, and half of these had fully repaid their mortgages, reports economist Peter Brady of the Investment Company Institute, the trade group for mutual funds. Among those with a mortgage, the median amount was less than half (44 percent) of the house's value. For all homeowners, median home equity -- the amount not owed on the mortgage -- was $120,000. (The median signifies the midpoint. Amounts were higher for half the households, lower for the other half.)To supplement Social Security, retirees can borrow against their home equity. They can also draw on retiree savings from defined benefit pensions, individual retirement accounts (IRAs) and 401(k) accounts. In 2010, almost three-quarters of households aged 55 to 64 had some combination of these retirement vehicles. The median value of the IRA and 401(k) accounts was $100,000, Brady says.
Posted by Orrin Judd at April 28, 2014 6:22 PM