Letter to the Editor: Retirement Doesn’t Have to Be a Dream
The energy and spirit of Tom Palome are admirable. But the answer to your headline – “How a six-figure salary can turn into working two part-time jobs at age 77” – is buried in the 32nd paragraph of the story: Though he has income from Social Security and a pension from a previous employer, Palome didn't set up an individual retirement account (IRA) or take advantage of the tax-deferred saving plans available to him during his years as a consultant. Palome has no retirement plan assets because, regrettably, he didn't plan for retirement.
Fortunately – and contrary to the theme of your story – his is not the typical case. Academic research shows that households approaching retirement generally are accumulating sufficient resources to maintain their standard of living after they retire (see Are American Saving Optimally for Retirement? and The Interplay of Wealth, Retirement Decisions, Policy and Economic Shocks for more information). The majority of Americans approaching retirement (eight out of 10 households) have resources from employer plans or IRAs, with seven in 10 owning retirement assets (see The Success of the U.S. Retirement System )
The public understands this: In annual surveys since 2009, about three-quarters of all households have expressed confidence that defined contribution plans such as 401(k)s can help savers meet their retirement goals (see America’s Commitment to Retirement Security: Investor Attitudes and Actions, 2013). Today's retirement system is working, and working well, for millions of Americans.
Paul Schott Stevens
President & CEO
Investment Company Institute