Archive for April 2020

The old saying “you snooze, you lose” is especially applicable to saving for retirement.

No lesser a genius than Albert Einstein once declared “the power of compound interest” to be “the most powerful force in the universe.” That’s probably true; and the second most powerful force is arguably the power of regular saving. Together, they’re “thermonuclear” in power—but only if they have enough time to operate.

For example: based on reasonable historical assumptions, a 55-year-old will have to put away $610 per month in order to have $100,000 saved up by age 65. If he or she had started 10 years earlier, only $216 per month would need to be saved in order to achieve the same result. And if the savings program had begun at age 25, only $50 per month would suffice!

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Tens of millions of baby boomers are approaching retirement age. Over the course of the few decades, this enormous segment of the population will stop contributing to Social Security, Medicare, and private investment programs. It will instead be drawing upon these institutions to the tune of trillions of dollars. This will result in enormous dislocations for the economy as a whole, shaking its very foundations. Still, some people—like deputy assistant secretary of the Navy Russell Beland—insist on sticking their heads in the sand and pretending that the problem will go away by itself.
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Having owned an employment agency for twenty years, Linda Miller thought she was well-off enough to retire four years ago, and she did.

Now, she’s back at work selling Avon cosmetics. Why? “All the money is going for gas and groceries,” she laments.
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Rep. John "Randy" Kuhl (R-NY) is keenly aware of the health care crisis facing future retirees. As corporations eliminate health care coverage for retirees, many people on fixed incomes are forced to choose between food and medicine. But his proposed means for dealing with the problem—tax-favored accounts similar to IRAs that allow people to save for future expenses—offers only a tiny band-aid, not a real solution. What is needed is real insurance with no ifs, ands, or buts.
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