When the oldest of my Generation X turn 70 in another 20 years, retirement for the "common man" will be an elusive dream they can't possibly achieve. I believe there are already too many factors eating away at my ability to save for retirement. I imagine baby boomers will be the last generation for which retirement for everyone was the norm.
According to a recent Personal Capital study cited by MoneyTalk News, Millennials will need $1.6 million to retire age 65. Experts say members of Generation Y won't be able to retire until they reach age 73. Experts have been saying for a while that members of Gen-X won't be able to retire until they are at least 70. However, I think it's more realistic to say the generations following the boomers will never retire unless they are exceptionally well off.
Dealing with hypothetical data
I think it's virtually impossible to come up with an accurate prediction of what people will need in 20 or 30 years. The Personal Capital study bases its hypothetical analysis on a 30-year-old married couple that already has stocked away $20,000 for retirement and hopes to have $100,000 each year in retirement. Their investments grow at 6 percent at an inflation-adjusted rate. They also receive $40,000 a year in Social Security. No one knows for sure if investments will grow. It's highly probably the Social Security system will be dismantled by 2033.
Factoring in higher health care
Baby boomers were able to save for retirement when the economy was booming. They didn't have to deal with runaway health care costs. However, my paycheck will be reduced by 30 percent next year due to increases in the health insurance. Saving for retirement will be the first "luxury" to go as workers in their 20s, 30s and 40s have to deal with rising health insurance costs.
Paying more in taxes
As taxes go up to offset the national debt, people will have even less money to save for retirement. When I go to take money out of my 401(k) or IRA in my 60s or 70s, I'm expecting taxes to be higher than at any other point in my adult life. It's also not so far-fetched to imagine the United States will be part of a global "New World Order" in another 20 years. We may be socked with some sort of global taxation that will make it virtually impossible for the common man to retire.
I personally can't tolerate people describing the recent Social Security benefits increase of 1.5 percent as "paltry." It may be the smallest increase since 1975, but it's still an increase. According to the Washington Post, it will give retired people an average raise of $19 a month. "Whoop-de-do," was the reaction of one retiree. It's the incompetence of baby boomer lawmakers and the reckless spending of the me-first generation that has left future generations to deal with benefit cuts, higher taxes, higher health care costs. But I guess their response to that would just be another resounding "Whoop-de-do."
More from this contributor:
- Investing Education
- Retirement Benefits
- baby boomers