Retirement Crisis in US

Millions of Americans are in vulnerability of not having enough money to housekeep their standard of living in retirement. The problem is getting worse over time. The consequences of these growing savings shortfalls could be severe for both American families and the national economy, as a large share of households may be forced to significantly reduce consumption in retirement and will have to rely heavily on their families, charities, and the government for help to make ends meet. Rather than staying in control of their economic lives, millions of Americans may be forced to muddle through their final years partially dependent on others for financial support and to accept a standard of living significantly below that which they had envisioned.

But what has led these one third American populations to the current miserable condition?

It was the inclusion defined contribution pension plan like 401k and the rapid and near-total disappearance of defined-benefit pensions which has left many U.S. workers unprepared. Almost one-third of all workers have no savings at all which has led to an impoverished future for the retiring population. The average monthly expenditure by Americans is about 2700 USD whereas the pension plan pays out only 1300 USD monthly cumulating to be 14500 USD annually. The major reason for why people fell easily for the 401(k) pension plan was the fact that it was tax deductible. Tax deductible means that the tax was paid on the income which was left after paying the instalment for future pension.

The burden of Retirement crisis is solely not on the retiring age but also on the Social Security of US as nation. This untimely crisis is likely to be a major expense on the Federal Reserve. The social security expense for the elderly retiring age majorly forms of health services and medicine. The fiscal deficit for US this financial year is likely to be broadened. Also considering the decrease in purchasing power of these elderly people, the demand for goods is likely fall, further pulling the nation towards the adverse aftermath of crisis and in direction of deflation.

To combat the crisis, the federal budget has on hold a big gob of budget reserved for the aged group but haze prevails on how it will be commuted.

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