Clark Howard's Tips
75 million have no access to retirement-savings plansOctober 30, 2007
Clark's strategies for investing infuriate some people. They take issue particularly with the way he steers folks away from variable annuities and toward index funds or tax-managed accounts. But he's not alone in slamming variable annuities.
The Wall Street Journal recently presented its reasons why they stink. But first, Clark wants to give some examples of index funds and tax-managed accounts so people know what he's talking about.
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CLARK'S TIP TOPICS
Find more consumer advice in Clark Howard's book, "Get Clark Smart" |
Did you know that half of all American families haven't saved for retirement? Of those who have, 25 percent have stockpiled living expenses for one year of retirement.
The problem is that we have not adjusted to the changes in retirement savings since Social Security is weakening and employer-provided pensions are going away.
The average Social Security benefit is $11,000/year. Very few people can live on that alone. So the bulk of retirement savings has got to come from you.
Over the last year, employers gained the right to automatically enroll you in a 401(k) plan and even step up your contributions every year. Laura Tyson, the former chairwoman of the Council of Economic Advisers, recently wrote in a Wall Street Journal editorial that someone forced by their employer into a 401(k) plan will save an additional $200,000 to spend in retirement.
Meanwhile, 75 million adults work for companies with no retirement plan at all. Of those millions, only one in 10 saves for retirement. But Clark thinks we need to move away from depending on the government to provide for our retirement.
Congress is planning to make small employers establish an IRA auto-deduction policy for their employees. That way the employees of small businesses will automatically be saving for retirement.
The bottom line is that we need to be more self-reliant. Clark believes that having the discipline to save for retirement builds the character of our country.
