Also in this playlist...
This transcript is automatically generated
President elect Barack Obama says he plans to act quickly to fix our economy and one area that could certainly use some repairs are American's retirement funds.
So what can be done to improve this method of seeding for the golden years -- Powell from marketwatch.com.
Joins us Robert thanks for being here.
Later -- to -- happen I read this article and said -- -- you what is wrong with America's plan for retirement list for me all the reasons why.
It has not worked thus far.
All right well there about five reasons a couple is the major one is that only half of working Americans currently have a 401K plan.
So that means that not happen to people who don't know more -- taking it plan.
The other thing is that of the people who are saving is -- a 401K plan.
Only 80% are all -- only 80% of those not acts only a hundred is only 8% of those who have access to a blow in Cape Wind is saving.
Really saving at a rate of five point 6%.
When they invest they invest wrongly about 30% -- percent in their company's stock.
And then they don't understand the risk -- of retirement they understand what the cost of healthcare will be they don't understand what longevity is what is a living your assets.
And then the last thing that's wrong with 41 K plans.
Is that people are now.
Defining their contributions so that withdrawing money from their ire from that or when -- -- reducing the amount that they contribute.
And we're also watching companies eliminating the match.
I could not -- Robert reading some of these statistics that right now Americans on average are only.
Three and a half times.
Of their income has been set aside for retirement when it should be closer to twenty times.
And what we think about the health care costs up to the 500000.
For people who are living to -- -- eight years old what do you need to do to get people will wake up call to say hello.
This is not really enough money to happy retirement.
-- -- So it's images and -- you're right we need twenty times here unless you're salary set aside in retirement fund what could be twenty years.
So a couple things need to be done for those of you have a 401K plan you definitely need to increase the contribution that you're making from five point 6% to ten.
Upwards of 15% I know that's hard in this current economy but that's kind of savings that -- need to set aside.
The alternatives would be to invest more aggressively or to think about working longer.
Now those -- who don't have a 401K plan at work one and one of the proposal that's being talked about right now.
Is that the being proposed by professor two reasons -- -- from the new school.
And -- suggesting that what we do is that we create something called guaranteed retirement account.
Which would be made available to people who don't have the defined benefit plan there place of work in this -- compliments of security and in essence what -- happen is that we.
The employer would take out 5% of your money.
And you have the option of increasing contribution if you want but -- when you retired.
That money would be converted into a lifetime annuity which would in combination with -- security replace about 7%.
-- you are up pre retirement and.
-- it sounds like us something we need to think a lot more about Robert Powell I want to thank you so much for bringing us up to date on these statistics we'll have you back.
To walk through more of this advice thank you so much for being here my pleasure I now.
Filter by section