The $6.6 Trillion Retirement Shortfall

Americans will be facing a multi-trillion dollar shortage in their retirement savings if they plan on keeping their standard of living when they retire, according to a study conducted by Retirement USA, an advocacy group.

Retirement USA had the research conducted by the Center for Retirement Research at Boston College. They determined that it would take $6,600,000,000,000 or about $90,000 per household to adequately fund future retirement. The determination is based on the analysis of about 70 million households made up of wage earners between the ages of 32 and 64.

It is well known that more and more big companies are dropping the traditional pension plans, known as a defined benefit plans. The replacement plan is the defined contribution plan, which is most usually a 401(k) savings plan.

The problem with 401(k) is that it was never created to be a primary source of retirement income. It was designed to go hand in hand with the traditional pension in addition to Social Security.

The primary problem with the 401(k) is that it is up to the participant to determine how much to contribute, which investments to utilize within the plan, and how to rebalance over time.

The general public has not demonstrated an ability to make these determinations in the past and the result will be continued shortfalls in retirement savings. The average investor fails to get even one-half of market returns, and coupled with the high fees in some 401(k) plans, there is little chance for workers to make up that $90,000 shortfall.

Unfortunately, many look to the government to solve the problem, and with the budgetary restraints in Washington there is little chance the government will make substantive changes. Therefore, it is up to each individual worker to take more responsibility in funding and directing their 401(k).

The reality is most workers don’t have the knowledge, time, or ability to make sound decisions. Talking with an objective investment advisor may be the best way to solve these problems.

Those wishing to find a trustworthy advisor who does not sell you a product should contact Garrett Planning Network or the National Association of Personal Financial Advisors.

About the author

Michael Chamberlain, CFP®

Hello. My name is Michael Chamberlain CFP®, the principal of Chamberlain Financial Planning and Wealth Management. Our firm is “fee-only” with offices in Sacramento, Campbell and Santa Cruz California. “Serving clients from the mountains to the sea.”

Our mission is to help clients realize their full potential today while planning for an abundant tomorrow through comprehensive financial planning and collaborative decision-making.

As an experienced investment and planning professional, I have had the privilege of being interviewed by and contributing to hundreds of articles in such publications as Money Magazine, Financial Planning Magazine,,, Nerdwallet,, Yahoo Finance and more.

I hope that you spend some time at the FiGuide site and learn more about the financial matters important to you. To learn more about our firm, visit our website or give us a call at 800-347-1340.

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