Warning: ‘retirement crisis’ ahead; Texas, other retiree hot spot states beware
The Wall Street Journal reports U.S. workers and employers are bracing for a “retirement crisis” because “powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.” This pending crisis bodes especially dangerous for Texas and other states commonly ranked in the top tier of state retirement hot spots.
The Journal quotes an Employee Benefit Research Institute (EBRI) study that found of U.S. workers surveyed, 57 percent reported less than $25,000 in total household savings and investments excluding their homes compared with 49% at that level in 2008. The study additionally noted 28% of Americans expressing no confidence in having enough money to retire comfortably—the highest level in the study’s 23-year history.
The EBRI survey found workers saving for retirement at 66 percent, down from 75 percent in 2009. When asked if they could secure $2,000 to address an unexpected need in the next month, only about 50 percent of the 1,003 workers and 251 retirees surveyed answered affirmatively.
Rising life expectancies adding perhaps up to 5 percent or $97 billion to corporate pension liabilities will create problems on two fronts as this longevity strains both retirement savings and pension plans.
The Journal article offers newly-released data on mortality rates from the Society of Actuaries, an organization which generates mortality projection assumptions used by U.S. retirement plans to project pensioners’ life spans.
In its first update since 2000, the society projects that men reaching age 65 in 2013 are expected to live an additional 20.5 years, up from 19.5 in the earlier projections. Women turning 65 this year are now expected to live an additional 22.7 years, up from 21.3.
In 2012, the MoneyRates.com 10 Best States to Retire comprised 1. Hawaii; 2. Idaho; 3. Utah; 4. Arizona; 5. Virginia; 6. Colorado; 7. (tie) Florida and New Mexico; 9. South Dakota; 10. (tie) California and Texas.
A November 2012 Forbes article asked Do You Live In A Death Spiral State? describing such locales as “a state where private sector workers are outnumbered by folks dependent on government.” Eleven states made the list: Alabama, California, Hawaii, Illinois, Kentucky, Maine, Mississippi, New Mexico, New York, Ohio and South Carolina.
It stands to reason that the most active fronts of this pending retirement crisis will be states which attract large retirement populations. Of that group, states already on a financial edge with more takers – those drawing money from the government as either an employee, pensioner or welfare recipient – than makers – those with gainful private sector employment – are most at risk.
California, New Mexico and Hawaii currently fall in both categories. Texas, thankfully, does not.
In Greatest generation, most entitled generation, Jonah Goldberg observes:
Don’t be fooled that this retirement crisis will be limited to the elderly. It’s impact will be massive, it’s effect will be challenging. Akin to Goldberg’s sentiment about having neither the space nor inclination to go into all that’s involved, suffice to say things can’t help but change – dramatically and across-the-board.
And with that, the question then becomes if we want to crash and burn or experience a controlled free-fall?
Never-ending claims of victim status and expectations of living in a state of perpetual entitlement must end. It’s not going to be fair, it’s not going to be pretty, it’s not going to be fun. There will likely be more losers than winners, but the sooner we get to work recognizing and addressing the realities at hand, the better off we’ll all be.
The Journal quotes an Employee Benefit Research Institute (EBRI) study that found of U.S. workers surveyed, 57 percent reported less than $25,000 in total household savings and investments excluding their homes compared with 49% at that level in 2008. The study additionally noted 28% of Americans expressing no confidence in having enough money to retire comfortably—the highest level in the study’s 23-year history.
The EBRI survey found workers saving for retirement at 66 percent, down from 75 percent in 2009. When asked if they could secure $2,000 to address an unexpected need in the next month, only about 50 percent of the 1,003 workers and 251 retirees surveyed answered affirmatively.
Rising life expectancies adding perhaps up to 5 percent or $97 billion to corporate pension liabilities will create problems on two fronts as this longevity strains both retirement savings and pension plans.
The Journal article offers newly-released data on mortality rates from the Society of Actuaries, an organization which generates mortality projection assumptions used by U.S. retirement plans to project pensioners’ life spans.
In its first update since 2000, the society projects that men reaching age 65 in 2013 are expected to live an additional 20.5 years, up from 19.5 in the earlier projections. Women turning 65 this year are now expected to live an additional 22.7 years, up from 21.3.
In 2012, the MoneyRates.com 10 Best States to Retire comprised 1. Hawaii; 2. Idaho; 3. Utah; 4. Arizona; 5. Virginia; 6. Colorado; 7. (tie) Florida and New Mexico; 9. South Dakota; 10. (tie) California and Texas.
A November 2012 Forbes article asked Do You Live In A Death Spiral State? describing such locales as “a state where private sector workers are outnumbered by folks dependent on government.” Eleven states made the list: Alabama, California, Hawaii, Illinois, Kentucky, Maine, Mississippi, New Mexico, New York, Ohio and South Carolina.
It stands to reason that the most active fronts of this pending retirement crisis will be states which attract large retirement populations. Of that group, states already on a financial edge with more takers – those drawing money from the government as either an employee, pensioner or welfare recipient – than makers – those with gainful private sector employment – are most at risk.
California, New Mexico and Hawaii currently fall in both categories. Texas, thankfully, does not.
In Greatest generation, most entitled generation, Jonah Goldberg observes:
I have neither the space nor the inclination to pronounce on what was good or bad about all this. But as Washington grapples with the legacy costs of the “greatest generation” — including the unsustainable burden of paying the retirement bills for the GIs’ supremely entitled children, the baby boomers, perhaps it is at least worth recognizing that the government and the culture designed to benefit one generation has come at the cost of those that come after it.He’s right. The die is cast. Every state in this country will face increasing economic pressures as this retirement crisis arrives. States like Texas with larger retirement populations should prepare to be hit hardest.
Don’t be fooled that this retirement crisis will be limited to the elderly. It’s impact will be massive, it’s effect will be challenging. Akin to Goldberg’s sentiment about having neither the space nor inclination to go into all that’s involved, suffice to say things can’t help but change – dramatically and across-the-board.
And with that, the question then becomes if we want to crash and burn or experience a controlled free-fall?
Never-ending claims of victim status and expectations of living in a state of perpetual entitlement must end. It’s not going to be fair, it’s not going to be pretty, it’s not going to be fun. There will likely be more losers than winners, but the sooner we get to work recognizing and addressing the realities at hand, the better off we’ll all be.
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http://watchdogwire.com/texas/2013/03/21/texas-retirement-crisis-wont-impact-just-retirees/
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