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Experts: ‘Retirement Crisis’ Concerns Might Be Overblown

Census Bureau survey does not account for at least 95 percent of IRA distributions and at least half of pension and annuity income.

by
Rodrigo Sermeño

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March 6, 2014 - 11:38 pm
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Sabelhaus said the Survey of Consumer Finances (SCF) might be better suited to capture retiree income and account flows. The SCF captures data on the income and wealth of U.S. families, including IRAs and 401(k)s.

Using the SCF reveals that resources available to retirees are more substantial than the CPS suggests. The increases for low-income individuals, however, are substantially smaller than those at the top of the income distribution.

He said the shift from defined-benefit plans to defined-contribution plans will only increase the need to measure retirement income and financial status in a different way.

Sabelhaus also noted that the demographic profile of retirees might be evolving as well. He said the increased participation of people age 65 and older in the workforce not only changes the definition of a retiree, it also increases their income and may have an impact on the solvency of Social Security.

President Obama plans to ask Congress to reduce tax benefits for high-earning 401(k) investors as part of his 2015 budget. The president wants to limit the value of all tax deductions, defined contribution exclusions and IRA deductions to 28 percent of income.

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Rodrigo is a freelance writer living in Washington, D.C.

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All Comments   (7)
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In other words, it will be useful for the government to impose Means Testing for SSA eligibility and tell those that saved money for retirement that they shoulda done like their neighbors and bought more new cars and took more vacations instead - because, "You don't need the money now and thus do not deserve getting back any or all of what you put in to the system - surprise!"
19 weeks ago
19 weeks ago Link To Comment
Saving for the future is one of those "bourgeois values" the left despises. So that they would advocate replacing personal saving with welfare programs of different kinds ought to be no surprise.
19 weeks ago
19 weeks ago Link To Comment
On the proposed increases in SSN, let me guess that it would help fund those with nothing, but those with something would not receive more, in fact would probably receive less in order to help fund the increase.

On the proposed limitation of contributions, I think our good buddy Romney may be the poster boy for that, with reports that he had between $20m and $102m (how's that for precision!) in his "IRA". That is, perhaps, an excessive sum to be given preferential tax treatment. I'd cap the total, not the contributions. In the small business world it can happen that an older guy with a small business has one or two great years when he can finally fund his own retirement, and being able to do this via defined benefit is completely fair.

Up to, oh, maybe $10m total.

Any more that he saves, he can save at normal tax rates.
19 weeks ago
19 weeks ago Link To Comment
They're also failing to consider the ameliorization to the retirement crisis that will be provided by the Obamacare death panels.
19 weeks ago
19 weeks ago Link To Comment
UCLA's Medical School is very worried about the lack of geriatric training in physicians who will treat the Boomers, which they call "the silver tsunami." See http://clarespark.com/2014/03/06/crises-real-and-manufactured/. At the same time, they support ACA with enthusiasm.
19 weeks ago
19 weeks ago Link To Comment
Here is what I think is going on. When the people who particpate in the survey fill out the numbers, they use their tax return, but reference the column on the right, taxable amounts. This is what ends up as part of the adjusted gross income, the income numbers that are always cited in IRS data. See page 111 of this pub, which are the estimated data line counts for each 1040 line.

http://www.irs.gov/pub/irs-soi/08inlinecount.pdf

IRS Dist 216B, taxable amount 162B
Pensions and Annuities 845B, taxable amount 506B
Social Security 416B, taxable amount 168B

I have no idea how this relates to the numbers above, perhaps they are only the amounts for over 65. 111B for 65+ vs 162 total for IRA, 477B 65+ vs 506B total for pension and annuity. One thing to point out is that the IRS numbers referenced in the article are taxable amounts only, not the total, so even they are low. (They are counting only the part that is included in AGI). How the CPS ends up with such low numbers needs to be explained by looking at the survey response and the sources the person who filled it out used. But aside frm that, even the IRS numbers cited are low, because they are only the taxable amounts included in AGI, not the full amounts.

19 weeks ago
19 weeks ago Link To Comment
Nearly every "progressive" policy is based on either bad data or outright fabrication so it figures that the retirement-related issues are too. A few bones, though:
1. "...force people to rely on Social Security..." I've been paying SS taxes since 1976. My share has run 6-6.5% and my employer shares have been the same. Take 6% out of an ordinary family's income and see what they have left to save toward retirement -- it's a big chunk.
2. Any way you slice this issue, a smaller generation of Millenials and Gen-X or Gen-Y means that fewer working-age people have to support more retirees. However that may be funded, that's the reality.
19 weeks ago
19 weeks ago Link To Comment
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