It’s tax day. Perhaps like millions of your fellow Americans, you waited to the last minute to file and will be trudging off to the post office or filing electronically later today. I’m not going to lecture about your procrastination. However, I am going to ask you two somewhat tax-related questions:
1. How much have you saved for your retirement?
2. On how much of those savings were taxes deferred?
Your answers will determine how you will spend your golden years when you no longer earn an income but need money for life’s necessities. This is more than a personal question; it is an issue with tremendous national ramifications.
As Charles Ellis and Alicia Munnell warn in their recent book, “Falling Short: The Coming Retirement Crisis and What to Do About It,” we have a retirement problem:
Because of economic and demographic developments, our retirement income systems are contracting just as our need for retirement income is growing. On the income side, Social Security is replacing less of our preretirement income; traditional defined benefit pension plans have been displaced by 401(k)s with modest balances; and employers are dropping retiree health benefits. On the needs side, longer lifespans, rising health care costs, and low interest rates all require a much bigger nest egg to maintain our standard of living. The result of all these changes is that millions of us will not have enough money for the comfortable retirement that our parents and grandparents enjoyed.
Don’t say you weren’t warned.
We know exactly what we need to do — save more and begin earlier to build our own nest eggs.
Continues here: Three Ways to Boost Retirement Savings