Retirement (In)security:
As a Nation, the United States is sorely unprepared for retirement.


1. Baby Boomers are at risk of not having sufficient retirement resources to pay for basic retirement expenses and healthcare costs

2. The Center for Retirement Research at Boston College estimates that our“retirement income deficit” is $6.6 trillion.

3. That number represents the gap between the pension and retirement savings that American households have today and what they should have today to maintain their standard of living in retirement.

Irrespective of the size of your retirement nest egg it still might not be enough to match most people’s expectations for retirement.

While the average balance of soon-to-be retirees in America is $300,000 Half of all Americans have less than $10,000 in savings, and nearly half of the oldest.

Concerned about the lack of retirement security

Only 14% of people say they are very confident they will have enough money to live comfortably in retirement.

4. That is down 9% since 2002.

5. And 69% of people believe they could save until age 65 and still not have enough.

6. Equally worrying is how Americans can pay for their healthcare, since Medicare does not cover everything. Retirees can expect to spend $183,000 in health expenses, but estimates vary considerably.

And that’s not all. The US, Australia, and the UK have not addressed the hardest part of retirement finance. People have saved, but the market does not provide adequate guidance and products on how to spend their money after they stop working. Low interest rates not only hurt DB plans, they also make it more difficult for retirees to manage income risk in retirement.

The government run pension plans are pay-as-you-go, where young workers pay taxes to support current retirees. This system depends on having enough young people to keep the system solvent, and aging populations are a problem. The US Social Security program is set to face shortfalls in 2033.

Addressing the retirement shortfall will take a combination of

  • more saving and better financial education. Both households and pension sponsors need to save more.Contributions by most workers in to their 401k Retirement Plans are meagre – in the order of 3 to 5% ONLY! (Hardly adequate to build a decent nest egg)

In a DC (Defined Contribution) system, retirement accounts also need to be made more widely accessible. In the US, only half of Americans have access to them.

The recently passed SECURE Act, which makes it cheaper for small plans to offer retirement accounts and all DC sponsors to offer annuities, is positive step. Australia offers a good model, where accounts are mandatory and saving rates are high.

We also need to accept many people will have to work longer. Retiring at 62, or even 68, may not be realistic. This doesn’t mean that we all need to work full-time into our 70s, with contract or part-time work potentially providing a bridge to make a full retirement more possible.

Employers are even more pessimistic; only 4% are “very confident” their employees will retire with sufficient assets. That is down from 30% in 2011.

The scariest thing: even in the best-designed systems, almost no one today will earn enough money in their lifetime to not work for 20 or 30 years at the end of their life. This is true no matter who pays for retirement—the individual, their employer, or the government.

It is not only low paid workers whose retirement security is uncertain.

The middle class is being squeezed, and we are at a point where half of households would not even be able come up with $2,000 in 30 days if faced with an emergency.

For many years, families were able to mask the effects of stagnant wages and rising costs by becoming two-income households, working more, and relying on credit.

But the Great Recession exhausted those coping mechanisms and exposed the underlying economic challenges facing the middle class.

Now, the middle class is struggling just to keep its head above water. With the significant economic challenges facing families, it should be no surprise that the middle class finds it difficult to save.

As noted above, half of Americans have less than $10,000 in savings, and 60% of the population has less than $25,000.

There have been many positive developments to help people save by expanding access to DC Plans and facilitating automatic savings.

However, despite all of those efforts, savings rates are still too low,and people are less likely to report that they are saving for retirement than just a decade ago.

Social Security is Not Enough:
It continues to provide families with a basic level of income security. It prevents millions of Americans from slipping into poverty when their working years are over because, like a pension, Social Security provides Americans with an income stream that they cannot outlive.

Social Security was never meant to be people’s sole source of retirement income.


The program replaces only about 40% of the average person’s income after retiring, but people typically need 65-85% percent of pre-retirement earnings to maintain their standard of living.

Thus, a robust private retirement absolutely essential to give ordinary people an opportunity to retire.

Cost of the Crisis:

In 2010, nearly 6 million Americans aged 65 and over were living in poverty or near-poverty.

By 2020, “Pensions are vitally important, that number is expected to increase by 33%.

Given that an increasing number of older people are reaching retirement age without income to supplement Social Security, we could see even higher poverty rates in the future.

This trend will place enormous new burdens on families, and it will strain our social safety net, which is already facing significant financial constraints.


Older people without adequate retirement savings will have trouble just making ends meet. Many will need longterm care, but few seniors will be able to afford it.

However little is being done to help workers put aside substantially more money for their retirement.

The big reality Congress addressed in the 2019 budget is the clear fact that Americans on average have inadequate savings for retirement.

When individual retirement accounts (IRAs) and 401(k)s were established decades ago, the object was to encourage retirement savings by offering people tax advantaged arrangements.

Things have not worked out as well as the originators of this legislation anticipated. For a number of reasons, people have failed to take full advantage of these financial vehicles.

The new law responds to this shortfall by further encouraging retirement savings in three ways:

First, it makes it easier for small companies to join together to share the administrative costs of 401(k) arrangements.

Second, it requires employers to include part-time workers in 401(k) plans.

Third, it allows employers, when they automatically enroll employees in 401(k) plans, to save at a higher rate, 15% instead of 10%.

Still Economists estimate that the public as a whole faces a $3.83 trillion deficit from what it will need to retire securely.

What is the solution?

The 401KLever Plan is the single most effective method of increasing workers retirement contributions & matched by their employers.

Simply because it is cost free to both workers and employers.

The 401KLever Plan is designed specifically for middle class families who are likely to experience the greatest disparity in living standards from where they are while workers remain employed to when they reach retirement.

For moderate to high income earners they are able to maximize contributions to their 401k plans and grow their retirement fund by $39,000 a year until age 50, and thereafter by $52,000 a year until retirement.

In the process the worker can receive a tax rebate of around $4,800 each year for their own contributions.

Employers are able to cut their wages bill by close to $23,000 each year per employee.

By earmarking wage savings to expand marketing budgets an added bonus for Employers is Revenue can increase by 3 to 5 times that expenditure.

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