TIME Retirement

Who Needs a House? Give Me a Nest Egg!

house_for_sale
Thomas Northcut—Getty Images

Retirement savings is trending higher and home ownership lower as our top financial goal.

More people are redefining their financial dream as a retirement nest egg; fewer as home ownership, new research shows. This trend started with the Great Recession and has not let up.

Half of American adults say that having enough money to retire comfortably is now their top financial goal, up from 47% three years ago, according to the National Endowment for Financial Education. Just 13% name home ownership as their most important goal, down from 17% in 2011.

This trend, ignited by the housing bust and deep stock market slump that began in 2008, shows no signs of reversing. The housing market may have begun to recover. But nearly one in five homeowners still owe more than their homes are worth, and so far the recovery has occurred mainly in just a few large cities. Just 2% of adults believe the recession has given way to a full recovery, according to Transamerica Center for Retirement.

Meanwhile, the population is aging and naturally placing a higher value on retirement income than on owning the place they live. There is good news on this front. Fidelity recently announced that the average 401(k) balance reached $88,600 at the end of the first quarter, up more than 9% from a year ago. The average balance has nearly doubled in five years, restoring some of the financial security lost in the crisis.

Still, most Americans are under saved an ill prepared to quit work for good at 66 or 67, an age that is rapidly approaching for a large part of the population. With lingering and persistent doubts about housing as a wealth builder—and the S&P 500’s heady total return of 32% last year—it’s easy to understand why a nest egg has become our top financial goal and perhaps even the new American Dream.

 

 

TIME Retirement

3 Generations, 3 Paths to the Retirement Poorhouse

Every working generation has a unique plan for retirement. Will any of them get there?

Banks and mutual fund companies pump out surveys and data points every day to illustrate the retirement income crisis in America. They want to make sure you don’t forget to save and invest—with them. But they have little to fear. It’s not like this crisis is going away anytime soon.

Every working generation is getting some part of the retirement security equation wrong. Boomers plan to work longer—but they aren’t keeping current on skills. Gen X is socking away cash in 401(k) and similar plans—but they are borrowing too much from those very accounts. Millennials have become dedicated savers and asset gatherers—but they spend too much and aren’t doing enough about their crushing student debts.

These are broad conclusions drawn from recent surveys. The most pointed conclusions come from the newly released 15th Annual Transamerica Retirement survey, which found that the effects of the Great Recession continue to weigh on all generations and are leading them down distinct savings paths.

Boomers Born between 1946 and 1964, the youngest are now turning 50. Boomers are first-generation Guinea pigs as it relates to the new retirement model. Many were mid-career when traditional pensions gave way to 401(k) plans. They haven’t had 40 or 50 years to stuff the new plans with cash and let compound growth do the heavy lifting. The lucky ones still qualify for traditional pensions. But this is a famously under-saved demographic with a median nest egg of just $127,000.

More than a third of boomers say Social Security will be their primary source of retirement income, up from a quarter before the recession, Transamerica found. Just one in five plan to not work at all in retirement. Yet staying at work isn’t always possible. Less than half are keeping job skills up to date and only one in seven are scoping out job opportunities or networking for employment. Meanwhile, just 21% of employers have programs to help older workers scale back at work. Health issues also prevent older people from staying at work as long as they may like.

Gen X Born between 1965 and 1978, this was the first generation to enjoy access to 401(k) savings and growth for nearly all their working years. Nearly all of them—91%—highly value these plans and 84% of those who are eligible participate in their company plan. Unfortunately, this group treats the 401(k) like a piggy bank: 27% have taken a loan or early withdrawal from the plan. In doing so they often incurred taxes and penalties, which on top of lost growth set their savings goals back further.

Gen Xers estimate they will need $1 million to retire, Transamerica found. Their median savings to date: $70,000. The oldest are just turning 50. So they have time if they begin to power save 20% or so of income. But nothing will help if they keep robbing the kitty. “Simply put, 401(k) loans are a wolf in sheep’s clothing,” say Catherine Collinson, president of Transamerica Center for Retirement Studies. “Everyone should know that it’s best to say no to 401(k) loans.”

Millennials Born after 1978, this huge generation about 80 million strong is a budding group of super savers that have heard the message about saving early and often. Seven in 10 are saving for retirement and began at the median age of 22. Millennials participating in a company-sponsored plan that features a match are socking away an impressive 10% of their salary.

Yet while the asset side of their ledger is encouraging, the liabilities side is frightening. More than half of college-educated Millennials owe student loans; 41% have a mortgage (many for greater than their home’s value) and another 41% have auto debt, according to a report from TIAA-CREF Institute. They are also neck-deep in credit card debt. So they’re saving, but their net worth isn’t necessarily rising. To an extent, this generation knows what it doesn’t know; 73% crave more financial information from their employer. Let’s hope they get it, because this a generation without financial safety nets—but ready to do what it takes to build retirement security over the long haul.

 

 

TIME Retirement

There’s a Dangerous New Way to Get a Quick Loan

Getty Images

Americans ratcheted up borrowing from retirement accounts during the recession and have never stopped. Here's why these should be loans of last resort

Lingering fallout from the Great Recession includes the high rate at which workers with a 401(k) plan borrow from that pool of savings, imperiling their future retirement security.

At the end of last year, 18.2% of participants in a defined contribution plan had loans from their plan outstanding, according to new data from the Investment Company Institute. That rate has held above 18% since 2010, having jumped from 15.3% in 2008.

More workers also have taken hardship withdrawals since the financial crisis, further evidence that some at least have come to view their 401(k) plan as a piggy bank—not a retirement account. Hardship withdrawals have held steady the past few years, occurring in 1.7% of plans last year, up from 1.3% in 2008.

Loans seem to be the top choice for families plugging holes in their budget. The average loan balance is around $7,000, representing about 12% of the typical remaining 401(k) balance of $59,000. That’s a big chunk of savings that isn’t available to grow during the period it has been borrowed. You’ll pay yourself interest when you settle the debt, but not enough to replace years of lost growth in a rising stock market. In many cases, the loans never get repaid and become subject to penalties and income tax.

Loans are easily the biggest source of “leakage” from retirement plans. About one in four American workers with a 401(k) plan expect to tap their retirement account for current expenses. This leakage tops $70 billion a year, equal to nearly a quarter of annual contributions, research shows.

The issue is so concerning that experts are looking for reasonable alternatives to 401(k) plans. Some believe funds borrowed from a 401(k) should be insured so that in the case of a worker who loses a job any money borrowed from the 401(k) plan would be replaced—not permanently lost, penalized and taxed.

In general, 401(k) plan loans should be avoided—or used as a last resort. They are not as costly as some pundits would have you believe. But failure to repay is all too common. Default rates on 401(k) plan loans have roughly doubled since the financial crisis and account for about $37 billion a year leaving retirement savings accounts.

 

 

TIME Retirement

This Is How Detroit Found Itself a Mysterious Pot of Gold

A protestor holds a sign outside the federal courthouse in support of Detroit city workers Rebecca Cook—Reuters

Suddenly the cops and firemen and other municipal workers' retirement doesn't look so bleak in the Motor City. But don't try this at home.

To the great relief of firefighters, police and other public employees in bankrupt Detroit, city fathers recently plugged a huge hole in their pension plans. For now, anyway, something close to these employees’ retirement dreams have been restored.

But how did they do it? Just a few weeks ago, Detroit leaders pegged the pension shortfall at $3.5 billion—about 20% of the city’s total indebtedness—and they were threatening to slash benefits beyond already expected cuts of up to 14% for cops and firemen and 34% for other workers. Miraculously, workers are now being assured that benefits cuts will be comparatively tame, amounting to less than a 5% reduction for those hardest hit.

Where did the money come from? Who found the pot of gold that is enabling the city to fill such a big funding gap? The answer, of course, is that no one found so much as a single hard penny. Actuaries simply juggled a few numbers on the city ledger and, voila, a paper windfall appeared. Don’t try this at home.

The most important accounting change was the assumed rate of return on investments held in the city’s two big retirement funds. Previously, the annual rate of return was estimated at 6.25% and 6.5% on the two funds. Now the city is assuming a rate of return of 6.75% on both funds. Why the bump? In part, anyway, the city seems to be taking heart in the stock market’s big gain last year, when after lackluster returns the past decade or so the S&P 500 rebounded with a glowing 32% total return.

A sustained higher rate of return would mean more annual income for the funds, making them better able to meet benefits promises with the same amount of assets. But the question remains: Is the higher return assumption realistic? One year is not a trend. Many planners believe we have decades of slow growth and modest returns ahead. A bankruptcy judge still must rule on the rosier projections.

A pension fund manager boosting the return assumption because stocks finally had a good year is a little like you at home predicting next winter won’t be so cold and slashing your heating budget. You might be right. But it’s just a guess—and if the guess is wrong you will have to find the money elsewhere to heat the house. Your finances only looked better briefly; the picture dimmed as soon as another cold winter hit.

So how realistic is the 6.75% return assumption? In the Detroit General Retirement System, annualized returns over the past seven years have been 3.9%, according to one analysis. The past five years, public pension funds have had a median annualized return of 5.3%, according to another analysis. Not so good, right?

But let’s not throw Detroit’s leaders under the bus just yet. Because people generally work and accrue benefits over 40 years or so, pension funds can take an extremely long view. The median pension fund return over the past 25 years has been 8.6%. The typical pension fund manager today assumes long-term rates of return between 7% and 8%. So Detroit has company, and may even seem cautious.

Among others, Warren Buffett has scolded pension managers for not recognizing a fundamental shift to slower growth and lower returns. But the new assumptions in the Motor City aren’t completely unsupportable. Maybe the city’s employees will catch a much-needed break and get the higher returns that pension managers hope for.

 

TIME Retirement

Turns Out Millennials Are Scary Smart With Their Money

Australian Holiday Makers Celebrate 'Schoolies' Week In Bali
Australian teenagers let their hair down in Bali—a popular destination for school breaks. Aussie teens are top of a newly released list of global youth wellbeing Agung Parameswara—Getty Images

New studies conclude that Millennials understand they must save. Doing it the right way is another matter.

Millennials are quickly becoming the most examined generation in history—and for good reason. Their numbers exceed even those of baby boomers, and with the social safety net fraying it’s never been more critical for young people to start saving early.

The latest string of surveys and studies is encouraging. On the financial front, this generation of mostly twentysomethings displays surprising fortitude. They recognize the importance of saving and tend to be more proactive about planning than their elders, concludes Northwestern Mutual.

Some 62% of Millennials rate themselves disciplined or highly disciplined as money planners, compared to 54% of folks aged 60 or over, according to the firm’s 2014 Planning and Progress study. Certainly, there is evidence that Millennials are making plenty mistakes and may be characteristically overconfident on the financial front. Yet 68% acknowledge room for improvement in managing their finances, suggesting a degree of humility not often seen with this age group. They appear open to learning more but aren’t sure where or how to find a trusted source. Many mistakenly take their cues from online friends.

One of the financial virtues of this group appears to be a slow and steady approach to building a nest egg. Roughly a third favor a long-term tried-and-true strategy, Northwestern Mutual found. Another third would like to take that approach but feel like they are too far behind to play it safe.

Millennials’ cautiousness may be a double-edged sword. Just 14% in the survey say they are pursuing a high-growth investment strategy even though such a strategy would promise superior long-term returns. This may be a case of playing it too safe. Millennials have 40 years to ride out any bumps. If their money is socked away in savings bonds and other ultra-conservative investments it won’t grow fast enough for them to retire even over a long period of time. Now is when they should embrace prudent, low-cost, diversified risk through stock index funds and similar investments.

Other surveys have found that Millennials are generally ahead of earlier generations in terms of understanding the need for saving. Two in three young employees are committed to or have the ambition to save for retirement, according to a report from Aegon and the Transamerica Center for Retirement Studies. One in four are habitual savers who ‘always make sure’ they are putting something away. Two in five intend to begin saving soon and three in five understand that retirement saving is important—they just don’t have the means yet.

In another survey, The Principal Financial Group Knowledge Center found that 84% of Millennials describe themselves as passionate about creating financial security—more than are passionate about raising well-rounded kids (60%), having fun (66%), making a difference (49%) and exercise (44%). One reason: Most believe Social Security will no longer exist when they retire, Principal found.

Millennials need to start right away for a lot of reasons. Many are loaded with student debt and underemployed. They’re not pursuing home ownership in a big way, which leaves them stuck renting in a climate a fast-rising rents and missing out on the housing recovery. This generation is off to a good start in terms of knowing what it needs to do to reach retirement security. Its biggest problems seem to be lack of job opportunity and having started adulthood in a deep hole of student debt.

 

TIME swimming

Michael Phelps Will Compete Once Again

Michael Phelps comes out of retirement
Former U.S. Olympic swimmer Michael Phelps waves to the spectators during a 2013-2014 NBA preseason game between Los Angeles Lakers and Golden State Warriors at Mercedes-Benz Arena in Shanghai, Oct. 18, 2013. Eugene Hoshiko—AP

The 28-year-old Olympian, who retired from competitive swimming in 2012, will compete at an event in Mesa, Ariz. on April 24-26. His trainer said Phelps hasn't yet decided if he'll participate in the U.S. national championship

American Olympic swimmer Michael Phelps is coming out of retirement to compete for the first time since 2012’s London Olympic Games.

The 28-year-old Olympian who retired from competitive swimming in 2012 will compete at an event in Mesa, Ariz. on April 24-26.

“I think he’s just going to test the waters a little bit and see how it goes,” Phelp’s trainer, Bob Bowman, told the Associated Press. “I wouldn’t say it’s a full-fledged comeback.”

Bowman said Phelps hasn’t yet decided if he’ll compete in the U.S. national championship if he qualifies. Phelps, the most decorated athlete in Olympic history, has previously said he wouldn’t compete past age 30.

“He’s really doing this because he wants to — there’s no outside pressure at all,” Bowman said.

[AP]

TIME Retirement

The Staggering Statistic Threatening Your Retirement

Debt levels among those on the doorstep of retirement have risen by four times in two past two decades, yet another factor delaying retirement for many.

Better health and unprecedented longevity, coupled with inadequate savings and a tedious social safety net, have been the main drivers reshaping the retirement landscape the past decade or so. But rising personal debt later in life has played a pivotal role too, contributing mightily to the need for people to work longer.

More Americans between the ages of 56 and 61 are carrying more debt than anytime in recent history, according to a paper from the Retirement Research Center at University of Michigan. Traditionally, retirement has been a period without a mortgage and few debts. Large regular interest payments while on a fixed income can become a tremendous burden.

Citing rising indebtedness among those on the doorstep of retirement, the paper says pre-retirees “would be very likely to feel the burden of sizeable monthly debt repayments, and to carry debt into retirement.” For many this will include a mortgage, forcing ever-greater numbers of people to work in retirement—an oxymoron that will be with us for the foreseeable future.

Dozens of surveys show that vast numbers of people expect to work at least part-time well past the age of 65. Last fall, the Associated Press and NORC Center for Public Affairs Research at the University of Chicago found that 82% of working Americans 50 or older say it is likely or very likely that they will do some work for pay after leaving their career.

“The survey illuminates an important shift in Americans’ attitudes toward work, aging, and retirement,” Trevor Tompson, director of the center, said. “Retirement is not only coming later in life, it no longer represents a complete exit from the workforce.”

Much is made of our longer lives and how little we have saved. Men are living 11 years longer and women are living 12 years longer than just 40 years ago, requiring greater savings or guaranteed lifetime income. Yet nearly 40% of workers age 50 and older have saved less than $100,000, not including pensions or homes; and 24% have saved less than $10,000, the AP-NORC survey shows. The staggering debts we now carry into our 60s only compound the problem.

The Retirement Center looked at total debt, including mortgages and medical bills, of pre-retirees in 1992, 2002, and 2008. It found consistent growth both in the percentage of debt holders and the amount of debt. In 1992, 64% of pre-retirees held debt; by 2008 the figure had reached 71%. In 1992, the median amount of debt was $6,200; by 2008 the figure had more than quadrupled to $28,300—rising at eight times the rate of inflation.

Among the most indebted pre-retirees, average borrowing among the top 25% rose from $50,000 to $117,300. The top 10% of borrowers at this time of life now carry an average of nearly $260,000 of debt. Such sums typically cannot be wiped out quickly. Studies have shown that roughly half of people aged 65 to 74 are still making a mortgage payment while a third carry a credit card balance and a quarter have some kind of installment loan.

This debt takes a toll beyond pushing people to work longer. As early as age 60 people tend to start making poorer financial decisions, which result in higher fees and interest rates that add to their financial problems. All of this contributes to an epidemic of elders filing for bankruptcy: the filing rate of those past age 65 is the fastest-growing segment—jumping from 2% in 1991 to more than 6% in 2007.

Thankfully, working longer has many benefits that go beyond your pocketbook because you’re probably going to live a long time and no one is going to fix the fraying social safety net anytime soon. The thing we are most empowered to change—personal debt levels—is pushing us that way too.

 

TIME Retirement

Even More Proof Americans Think It’s a Great Time to Retire

Jonathan Kitchen—Getty Images

A new survey by the Employee Benefit Research Institute finds that 18 percent of Americans are "very confident" they'll live comfortably when they retire, up 5 percent from last year, thanks to planning like a 401(k) plan or IRA

The evidence keeps pouring in: last year’s torrid stock gains have revitalized the retirement dreams of many Americans. After five years of rock-bottom readings, new data show that confidence in a secure retirement has lifted for workers and retirees alike.

Among workers, 18% now say they are “very confident” they will live comfortably in retirement, up from 13% last year and similar readings each previous year since the recession, according to the 2014 Retirement Confidence Survey from the Employee Benefit Research Institute. Some 37% of workers are “somewhat confident”—also a post-recession high-water mark.

Among retirees, 28% now say they are very confident about maintaining their lifestyle, up from 18% last year; 39% say they are somewhat confident. For both workers and retirees, confidence remains short of peak levels reached before 2007. For example, 79% of retirees were very or somewhat confident about their future just before the crisis—a difference of 12 percentage points.

The reversal is heartening news and ads heft to recent reports showing that retirees, especially, are feeling better than they have in years. Fewer are postponing retirement and more say they believe the stock market will continue to rise and that interest rates will rise as well, providing a higher level of secure income.

But let’s not declare victory over hard times just yet. Two distinct sets of savers seem to be driving the gains in confidence: those with high household income and those who participate in a formal retirement plan like a 401(k) or IRA, EBRI found. This uneven advance may help explain why the percentage of the most forlorn workers and retirees–those saying they are “not at all confident” about retirement security–remains stuck at recession levels.

Nearly 50% of workers without a retirement plan are not at all confident about their financial security, compared with about 10% of those with a plan. Workers in a formal plan are more than twice as likely to be very confident (24%, vs. 9%) about retirement, EBRI found.

The biggest impediments to saving seem to be the high cost of day-to-day living and accumulated debt, the survey found. More than half of workers say daily expenses consume all their income. Meanwhile, only 3% of workers that describe debt as a major problem feel comfortable about retiring while 29% of those who have few debt issues say they are confident in their ability to retire comfortably. That’s hardly a surprise. But it drives home the importance of getting control of your debts before retiring.

TIME

Turns Out Now Is a Brilliant Time to Stop Working

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Cavan Images—Getty Images

Retirees are feeling better about their finances than they have in years. The rising stock market is one reason. But seniors also have a sense that interest rates will finally move higher and make income easier to secure.

Retirees are feeling more confident about their future than they have in years, new data show. Much of the optimism flows from last year’s heady stock market gains. But the prospect of higher bond yields, a popular source of income, is also part of the cheerier outlook.

Investors of all stripes are feeling more upbeat. A Wells Fargo and Gallup index measuring investor confidence jumped 48% in the first quarter, approaching levels last seen before the budget fiasco and partial government shutdown last summer. Most of the gain is attributed to a seven-fold surge in retiree confidence. Non-retiree optimism rose less than 10%.

Some 74% of retirees and pre-retirees say they feel positive or very positive about stocks, up from 62% a year ago, according to a survey by Ignites Retirement Research. Retirees in this survey also registered more optimism than those still at work.

The surge in hope follows a year in which the S&P 500 returned 32%, one of the best calendar-year gains in modern history. That gain repaired a lot of portfolio damage from the recession; it also lifted the spirits of retirees relying on dividend-paying stocks for income. It was the first reading of the Wells Fargo/Gallup index in nearly two years where retirees expressed more hope than non-retirees.

In another sign of retiree confidence, a study from CareerBuilder.com found that the percentage of seniors opting to postpone retirement is declining. Among workers 60 and older, 58% now say they will delay retirement—down from 61% who planned to delay retirement a year earlier. A greater percentage of workers also expect to retire within four years and a smaller percentage now say they will never be able to retire.

Some of the new optimism owes to the prospect of higher bond yields, pollsters say. Retirees have a growing feeling that interest rates will rise this year, and with that they will find it easier to secure income from short-term bonds, bank CDs, annuities and other fixed-income vehicles. That’s a surprising development because so far interest rates have not risen. In fact, after a short, sharp burst higher last spring rates have declined again, making income more difficult—not easier—to find.

One dollar of guaranteed retirement income at age 65, purchased today by someone who is 60, would cost $16.65, according BlackRock’s Cori index. That’s up from a cost of $15.50 for $1 of income last August. Put another way: Last August, $1 million would have secured $64,516 of annual income for a 60-year-old retiring in five years. Today, it secures just $$60,060 of annual income.

Interest rate moves are the biggest factor in this calculation. Retirees are putting a lot of faith in something that has yet to materialize. Still, as the Fed winds down its stimulus package and the economy continues to recover, counting on higher rates and easier income would seem to make sense.

TIME

The Real Debt Crisis We Aren’t Talking About

San Jose Is Wealthiest City In Nation
San Jose, California Justin Sullivan—Getty Images

I spent the day in San Jose, California yesterday, reporting on the city’s effort’s to come to grips with what Mayor Chuck Reed calls a “crisis” in the pension system that threatens the future of the town. At first sight, it seems strange that a town full of techies and which is home to companies like eBay and Adobe can’t afford to fill potholes or keep local libraries open full-time. But gold-plated city pensions are, according to the Mayor, the chief reason that this is the case. And the cut backs that are being made to afford them may actually result in greater economic bifurcation in the city, and higher tax rates for poor and middle class taxpayers, many of whom have little retirement savings themselves.

I’ll be blogging more about what’s happening on the ground in San Jose later in the week. But first, a bit of background on the real debt crisis in this country, the one that we haven’t talked about seriously yet, let alone come to terms with—the retirement crisis. The key stat you need to know: the median household retirement savings for all workers between the ages of 55 to 64 is $120,000. That works out to about $625 a month. A full one-third of the workforce aged 45 to 54 has saved nothing at all for retirement. At a time when social security benefits are being paired back, public pensions are being restructured en mass, and housing growth is flat (only the top 10 markets in the country are predicted to have any significant price increases in the next 15 years), this is a looming iceberg of a crisis.

Declining workforce participation numbers show how quickly the boomers are moving out of work, either by choice or force, and into a retirement in which more than half of them won’t match even 70 percent of their previous income levels. That has implications for everything from over U.S. consumption and GDP growth, to politics in the 2014 Congressional elections and the 2016 Presidential elections, in which boomers will increasingly face off against everyone else for a shrinking piece of the federal pie. (They will likely continue to fight necessary entitlement reform in large part because social security is the only thing most will have for retirement.)

The crisis can be split into two parts. First, the public pensions debacle, which involves only 10 percent of the American workforce, but has economic implications far beyond that, as pension entitlements tank entire cities, like Detroit. Second, there’s the private crisis—only 55 percent of private sector workers in America have access to any kind of formal savings plan, like a 401K. With large companies paring back benefits, and most job creation coming from small- and middle-sized companies that can’t or won’t offer such benefits, the stats will likely get worse in the next few years. California is in many ways ground zero for both the public and private portions of the crisis. Aside from Detroit, the largest public pension fights and biggest municipal bankruptcies have been in places like Stockton, Vallejo, and San Bernardino. Meanwhile, the state also has more retirees, young people without benefits, poor people, immigrants and small- or middle- sized companies than most states, meaning that it hits all the red buttons in terms of citizens who are most at risk in terms of retirement security.

Yet it’s also at the center of the most innovative new proposals about how to fix the crisis. San Jose Mayor Reed is pushing pension reform that would keep benefits that workers have earned but allow changes to benefits earned in the future, and force local politicians to raise a red flag if public pensions are at risk of being under-funded. (The failure to do that, and take responsibility early on, is a key reason many cities have gone bankrupt.)

Meanwhile, in the private sphere, Governor Jerry Brown signed the California Secure Choice Retirement Savings Program, developed by state senator Kevin de Leon, into law last year. This plan, which would be a state-run defined benefit program guaranteeing a minimum level of income for any private sector worker, will require everyone to put 3 percent of their income into a super conservative indexed fund. The idea would be to create a kind of substitute or add-on for social security. It’s getting huge push back from the financial industry (which doesn’t want to lose fees) as well as many conservative state politicians. But it’s already being copied in New York and Maryland. Illinois, Oregon, Washington, Connecticut and even Arizona are taking consultation on similar plans.

If successful, it would mark a sea change in the way we’ve thought about retirement, which everyone admits isn’t working. It would also mean a move back to a new kind of state-run program, very different from the huge entitlement systems of the past, but also different from the do-it-yourself, market knows best ethos of the 401K society that has left most people bereft. I will visit a variety of communities in California this week that reflect different aspects of the retirement crisis – look out for my blogs from San Jose, Stockton and L.A.

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