AMERICA’S DO-IT-YOURSELF SYSTEM IS FAILING MANY RETIREES. ANSWERS FROM TWO RETIREMENT EXPERTS

December 13, 2019

Why are so many American seniors facing downward mobility in retirement? Retirement experts Teresa Ghilarducci and Jamie Hopkins have answers and solutions.

WEALTHTRACK Episode #1624; Originally Broadcast on December 13, 2019

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70% of current retirees say they would have “no idea what they would do” without Social Security yet only 13% of Millennials expect to rely on it. That is just one of the stark differences between current and future retirees according to Wells Fargo’s 10th annual retirement survey. Download the study here [.pdf]

WEALTHTRACK’s retirement experts all agree that for most people deferring Social Security benefits until the age of 70 is one of the best financial decisions you can make. This website will help you find out what it could mean for you.

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JAMIE HOPKINS

Consuelo Mack There is a retirement crisis in this country. It is becoming more apparent as 10,000 baby boomers turn 65 every day. A recent Wells Fargo survey found that more than eight in ten current retirees fund their retirement primarily with Social Security, or a pension; just 5 % do so from personal savings such as an IRA or 401(k). Seven in ten retirees say they would have “no idea what they would do” without Social Security.     Contrast them with younger generations who expect savings to be the top source of their funding; 45% of millennials say they must rely on IRAs or 401(k)s and only 25% expect to rely on Social Security or a pension.   

Everyone talks about income inequality, but there is persistent extreme retirement inequality and it’s getting worse for the lowest-earning workers.  Workers in the top 20% of earnings distribution have held about half of all retirement wealth between 1992 and 2010, whereas the share in the bottom 20% fell to 1% from 3% in the twenty-year period. And the percentage of those without any savings among the bottom earners increased to 51% from 45%.  

No matter what income group you look at savings makes a huge difference. The top 10% of savers in all income groups, from the highest to the lowest consistently held 10-20 times the retirement wealth of the bottom 10% of savers.  

What has caused the retirement crisis and are there policy and personal solutions to fix it? Two retirement experts will join us with some answers. Teresa Ghilarducci is a Professor of Economics at the New School for Social Research where she is Director of the Schwartz Center for Economic Policy Analysis (SCEPA) and the Retirement Equity Lab (ReLab), which researches the causes and consequences of the retirement crisis. Ghilarducci is a co-author with former WEALTHTRACK guest, Tony James of Rescuing Retirement: A Plan to Guarantee Retirement Security for All Americans

Jamie Hopkins is Director of Retirement Research at Carson Wealth, and Finance Professor of Practice at Creighton University College of Business. Hopkins a frequent WEALTHTRACK guest is an expert on retirement income and author of Rewirement: Rewiring the Way You Think About Retirement.    Mathews Asia

HAVE A PLAN TO SAVE REGULARLY

Top 10% of savers in every income group consistently held 10-20 times retirement wealth of bottom 10% of savers

GHILARDUCCI: DEFER SOCIAL SECURITY

  • Wait until 70 to collect
  • Each year deferred adds 8% to annual benefits for life

HOPKINS: BOND PORTFOLIO REPLACEMENT

  • Consider a Fixed-Indexed Annuity with an income rider
  • Protection from losses
  • Partial upside potential based on the chosen index
  • Provides investment stability and income for life
No stock mentions in this episode.
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FINANCIAL INSECURITY

Financial insecurity in childhood was a primary motivator for both Teresa Ghilarducci’s and Jamie Hopkins’ personal and professional interest in retirement security.


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