COMMENTARY | Home ownership was once dubbed the American dream, but now retirement seems to be creeping becoming the new American dream. A report from USA Today highlights the home ownership rate fell to 66 percent in the fourth quarter of 2011, which continues a seven-year dip in the rate from a peak of 69.4 percent in 2004. Meanwhile, CNBC reports many people will find themselves punching the time clock until the ripe age of 70.
The CNBC report mentions that defined pension benefit plans have all but vanished from the modern workforce and have been replaced by 401(k) savings plans. TheWeek.com reports the recent financial crisis wiped out $1.6 trillion in 401(k) savings, which is nearly one-third of the total amount workers had saved for retirement.
TheWeek report also indicates the average balance across the 50 million 401(k) savings accounts rings in at about $60,000. It does not take an MBA to realize that sixty grand is probably not going to last anyone who decides to retire at 60 or even 65 years old, especially since the report mentions Social Security benefits for an individual will be around $15,000 for an individual and $22,000 for a couple. However, even more disturbing is the statistic that 43 percent of workers aged 45 to 54 are not saving for retirement at all, which could signal a disillusionment with the entire process.
Low 401(k) balances supplemented by small Social Security payments are going to deal a harsh blow when the supposed golden years arrive for many workers. Perhaps the financial meltdown and recession are to blame and perhaps lack of education on what to do with 401(k) funds are the reason for the trouble ahead, but one thing seems fairly clear for workers across America. All those dreams of working hard and taking it easy are vanishing quickly and retirement could be beyond the grasp of many.