We’ll Never Stop Worrying About Those Nest Eggs

“It’s crazy that we ended up with this as our retirement system,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. The 401(k), she says, was intended as a supplement to a traditional pension and to Social Security. “It was supposed to be money that you could use to go to Paris,” she said. “Instead, it’s become our basic system.”

Because we depend on accounts like 401(k)’s, she said, we should strengthen them through measures like mandatory automatic enrollment and incentives for employee contributions of at least 10 percent of wages, with an employer match equal to half of those paycheck deductions.

At the Times, Jeff Sommer has been looking at the retirement savings crisis over the last few weeks, showing why a $1 million nest egg ($1 million being symbolic of American savings goals) may no longer be enough for retirees to live on without some other kind of supplemental income. The really sad part is that most of us are far from the $1 million mark (“the median financial net worth of American households of all ages, excluding homes and cars, is $10,890, as estimated by Edward N. Wolff, an economics professor at New York University”), and simply telling people they need to save more isn’t really going to solve anything. John C. Bogle, the founder of Vanguard, recently told The Philadelphia Inquirer that the American retirement system is “facing a train wreck.” We hear Australia has a pretty good model.

Photo: walknboston

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