Interesting numbers

Right now, the average retiree is getting about $14,000 a year from Social Security. To buy a similar income stream on the open market, a 66-year-old would have to pay about $250,000. Someone getting the maximum benefit, $28,000 a year, would need to pay about $500,000.

It's something to bear in mind as we debate cutting Social Security. Most Americans are already grossly underprepared for retirement and have saved far too little.

According to the most recent survey by the Employee Benefits Research Institute, a think tank specializing in the topic, fewer than half of workers have even saved $25,000, and only a third have saved as much as $50,000. Forty-four percent have saved less than $10,000, and a quarter have basically saved nothing at all.

To put these numbers in context: Someone with $25,000 can buy an annuity (with the 3% annual bump) paying maybe $1,400 a year. Someone with $50,000 can raise that up to $2,800 a year. That works out to an income of $54 a week. Good luck with that.

If we want to cut Social Security, even prosperous middle-class Americans need to save much, much more. Starting about 20 years ago. (Source: WSJ).

These are very interesting numbers. It is clear we are not saving enough. We grow up with the idea that we can borrow and keep going. Saving should be part of your budget. And if you are young, start saving now! Develop the discipline of saving for your future and your security when you are old. Yes, you are not immortal, even if you think so now.  

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

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