The coming retirement crisis

Trouble is headed our way. Big trouble. You thought the mortgage crisis was bad, the retirement crisis will be much worse.

Here’s the tragic story in simple terms:

• The Great Generation had a good deal
• Employers provided workers pension plans
• Those pension plans would pay a certain monthly amount upon retirement, usually age 65
• When a retiree died, the pension checks stopped
• The longevity risk was on the employer, however, the risk was spread across hundreds or thousands of employees; some lived long, others died right after retirement
• Then poof! Retirement benefits, the reward for many years of valuable service, changed.
• The Baby Boomers got a different deal
• Employers began dissolving their pension plans and transferred the financial risk to employees
• The 401(k) plan was introduced
• The longevity risk fell squarely on the employee’s shoulders
• Today the average 401(k) balance is $15,000 according to MSN Money
• As Baby Boomers reach retirement age, they will be required to keep working
• If you die at age 65, you won’t need a retirement plan
• “Work until death” will be the next retirement plan offered by employers

I recommend you read America’s Looming Retirement Crisis on MSN Money.