We reported several weeks ago how state pensions for future generations in the UK will be ‘derisory’.
Now, we learn that Americans will have a shock when they realise how little they will have to live on when they retire.
The BBC reports: A former Assistant Secretary of the Treasury warns that the US government is standing idly by. “We need to do something, we’re not doing anything,” she says.
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Professor Alicia Munnell, who is now director of Boston College’s Centre for Retirement Research, tells BBC World Service’s In the Balance programme that most Americans’ voluntary 401(k) pension schemes are seriously under-funded.
In a new book, Falling Short, she says the only answer is to work longer and save more.
But it is part of a bigger global pensions gap between what is needed to fund pensions and what is actually available in private and public pension pots.
America’s 401(k) was introduced in 1978 as a tax-efficient way of encouraging individual citizens to save for retirement.
But the average 401(k) fund, to which individuals and employers contribute, stands at $111,000. That’s about enough to provide just $400 (£256) a month in retirement.
Niamh Harris