A recent survey conducted by global financial services firm ING found that despite the massive losses experienced in personal and retirement investments brought about by the recession and the bursting of the housing/financial bubble, most Americans are confident in the private retirement savings system.
According to the findings, a majority of Americans believe the current private retirement savings system is not at all broken. In fact, the survey showed that those in a workplace plan were more confident, informed and proactive when it came to their savings.
Moreover, respondents believe that one’s retirement should be handled by the individual, not the government.
Regardless of the evolving policy debate on the issue of retirement, nearly three-quarters of those polled (74%) agreed — and almost half (49%) strongly so — that saving for retirement was an individual’s responsibility and not the government’s job.
The ING survey of 1,000 men and women across the country was conducted “to better understand their attitudes about the private retirement savings system — and specifically defined contribution plans.”
The results of the survey are comforting in an age where people seem increasingly willing to surrender their freedoms and control over their own lives in exchange for increased reliance on government. The strength of this sense of responsibility and individualism will be required in the not-too-distant future, assuming that the government’s long-term trend of overspending and racking up debt well beyond our means is not dramatically altered, for no one can rely on a broke government to take care of them.
When the money runs out, people certainly won’t be able to rely on Social Security. According to the Social Security Administration’s FY 2009 Performance and Accountability Report (see “Highlights of Financial Position,” p. 40),
Social Security’s financing is not projected to be sustainable over the long term with the tax rates and benefit levels scheduled in current law. In 2016, program cost will exceed tax revenues, and, in 2037, the combined OASI and DI Trust Funds will be exhausted according to the projections by Social Security’s Chief Actuary. . . . In present value terms, the 75-year shortfall is $5.3 trillion.
The outlook for state and local pension plans for public employees is not any better. State and local governments are also facing several trillions of dollars worth of unfunded pension and retiree health care liabilities over the next 30 years (see here and here).
Thus, it seems we will increasingly be relying on private retirement savings one way or the other. State and local government workers who have been earning both higher salaries and much greater benefits than their private-sector counterparts, and who have fought tooth-and-nail to resist the switch to 401(k)-style defined-contribution retirement plans more in line with those received by those in the private sector who are paying for those inflated salaries and benefits, would be wise to keep this in mind and start getting accustomed to the idea.