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Crossing Our Fingers for Retirement

Our 401(k)’s are one of the economic risks the vast majority of us live with—but don’t hear much about. Robyn Blumner writes in the St. Petersburg Times that the modern retirement plan is to cross your fingers.

In the United States, Social Security provides the average worker with only 45 percent of their preretirement income, while in Denmark workers can retire with 91 percent of their prior salary.

Americans were supposed to make up the difference through employer-sponsored pension plans. That is, until employers shook off that obligation by exploiting a tax vehicle for retirement savings—the 401(k)—that was intended to encourage employees to put money aside for retirement, not upend employer pensions.

With only about 12 percent of workers between 30 and 39 now enrolled in a defined-benefit pension plan, according to the Center for Retirement Research at Boston College, employers are off the hook. They can unilaterally reduce or even eliminate 401(k) contributions.

You cross your fingers you earn enough to save some towards retirement. You cross your fingers your employer contributes even a little. You cross your fingers the market doesn’t crash.

When do you run out of fingers to cross?

Tags: Retirement