As a future financial planner, I am not too optimistic that social security will exist, at least in its current form, by the time people my age reach retirement. If it is there, it will be icing on the cake. People need to learn to save sooner rather than later. I would like to see more types of tax advantage accounts to incentivize people to save. Perhaps raising the contributions limits on IRAs or introducing new types of accounts such as the Universal Savings Account.
We were actually discussing the issue of Social Security and Medicaid yesterday in my investment class. Currently if the Government does not intervene with any action Social Security will be broke by 2030, however a radical reform and overturn could make this last longer and possibly into perpetuity. The cost of Medicaid has also grown dramatically and it has gone from 3 percent of the government budget to 28 percent sine 1970. In other words with the things are trending, our generation should plan on paying into Medicaid and Social Security funds without receiving these benefits, if nothing is done. In addition, I find the low amount of savings and retirement savings particularly worrisome, because it shows just how dependent some people will be on Social Security. For example I find the stat from GOPbanking rates interesting, when they say that the majority of 30 year olds are well behind their savings goal.
Just like how normative statements would never equal to positive statements, even if people would consider or have thought of retirement savings, not that many people will be able to take an actual action to save for retirement.
The article states that "90 percent of its study's youngest respondents said they planned to or began saving in their 30s or earlier. However, only 64 percent of respondents ages 35 to 44 actually began saving in their 30s. Roughly 22 percent of all respondents say they began saving between the ages of 40 and 50."
Everyone knows that the earlier they start saving, the better off they would be with less pressure to work and save in late ages, and maybe become even less dependent on government programs. However, I don't think it's the matter of lacking incentives to save, nor not acknowledging the importance of saving for the retirement. I think it's simply because they can't afford such amount to be saved.
Considering my future saving plans, I probably won't even start saving for "retirement" until my late 20s, when I pay back all my college and graduate school tuition loans. And I wouldn't apportion much of my income in late 20s and early 30s because I have to take loans for the house, prepare money for marriage and children.
In Korea, there is this new term called, Sampo Generation, meaning a generation that gave up 3 things - relationship, marriage and childbirth. [https://en.wikipedia.org/wiki/Sampo_generation#cite_note-6]
Could this phenomenon(more Millenials giving up on marriage and childbirth) have been a better option for US? Less people being dependent on Social Security at the cost of lower birth rate and increase of single family households?
So is it really our fault for not saving enough and putting pressure on government in the future? Or is it just the system that this is the best that us Millennials can afford? I personally think it's a systematic problem where our generation happened to be the most unfortunate one, not anything else.
Also, I came up with a question. Since Gen X-ers have no retirement account or less than 50K, since the recession wiped out 45% of their net wealth on average. Imagine if Generation X acted irrational, and decided to save the same amount they used to before the recession, and didn't pump money into Consumption(C of Y=C+I+G+NX equation). Wouldn't it have taken longer for US to get out of recession?
As a future financial planner, I am not too optimistic that social security will exist, at least in its current form, by the time people my age reach retirement. If it is there, it will be icing on the cake. People need to learn to save sooner rather than later. I would like to see more types of tax advantage accounts to incentivize people to save. Perhaps raising the contributions limits on IRAs or introducing new types of accounts such as the Universal Savings Account.
ReplyDeleteLink: http://taxfoundation.org/blog/universal-savings-accounts-introduced-congress
We were actually discussing the issue of Social Security and Medicaid yesterday in my investment class. Currently if the Government does not intervene with any action Social Security will be broke by 2030, however a radical reform and overturn could make this last longer and possibly into perpetuity. The cost of Medicaid has also grown dramatically and it has gone from 3 percent of the government budget to 28 percent sine 1970. In other words with the things are trending, our generation should plan on paying into Medicaid and Social Security funds without receiving these benefits, if nothing is done.
ReplyDeleteIn addition, I find the low amount of savings and retirement savings particularly worrisome, because it shows just how dependent some people will be on Social Security. For example I find the stat from GOPbanking rates interesting, when they say that the majority of 30 year olds are well behind their savings goal.
This comment has been removed by the author.
ReplyDeleteJust like how normative statements would never equal to positive statements, even if people would consider or have thought of retirement savings, not that many people will be able to take an actual action to save for retirement.
ReplyDeleteThe article states that "90 percent of its study's youngest respondents said they planned to or began saving in their 30s or earlier. However, only 64 percent of respondents ages 35 to 44 actually began saving in their 30s. Roughly 22 percent of all respondents say they began saving between the ages of 40 and 50."
Everyone knows that the earlier they start saving, the better off they would be with less pressure to work and save in late ages, and maybe become even less dependent on government programs.
However, I don't think it's the matter of lacking incentives to save, nor not acknowledging the importance of saving for the retirement. I think it's simply because they can't afford such amount to be saved.
Considering my future saving plans, I probably won't even start saving for "retirement" until my late 20s, when I pay back all my college and graduate school tuition loans. And I wouldn't apportion much of my income in late 20s and early 30s because I have to take loans for the house, prepare money for marriage and children.
In Korea, there is this new term called, Sampo Generation, meaning a generation that gave up 3 things - relationship, marriage and childbirth. [https://en.wikipedia.org/wiki/Sampo_generation#cite_note-6]
Could this phenomenon(more Millenials giving up on marriage and childbirth) have been a better option for US? Less people being dependent on Social Security at the cost of lower birth rate and increase of single family households?
So is it really our fault for not saving enough and putting pressure on government in the future? Or is it just the system that this is the best that us Millennials can afford?
I personally think it's a systematic problem where our generation happened to be the most unfortunate one, not anything else.
Also, I came up with a question. Since Gen X-ers have no retirement account or less than 50K, since the recession wiped out 45% of their net wealth on average. Imagine if Generation X acted irrational, and decided to save the same amount they used to before the recession, and didn't pump money into Consumption(C of Y=C+I+G+NX equation). Wouldn't it have taken longer for US to get out of recession?