Saving for Retirement in a Broken Retirement System

Our retirement system is broken.

The concept of retirement is new.  Up until the industrial revolution you worked until you died.  Pensions did not exist.  You saved, families supported multiple generations and you were ultimately responsible for yourself.

  • Pensions as we know them today did not become common until World War II.
  • When Social Security began payments there were only 9 million people who were over age 65, in 2010 that number was up to 40.3 million people and the baby boomers just started turning 65 in 2011!  (Source)
  • 401K’s were first started in 1980 (only 32 years ago) and some 40% of people don’t even have access to them. (Source)

“Retirement” is in its childhood, when you look at how long the world has been around versus how long we have had retirement we must remember that our system is still just a toddler.

You would not expect your child after five years to be done growing and developing.  You expect them to change, grow and adapt as they learn about what works and what does not work.  In fact as humans we never stop learning and changing.

Our “retirement” system should also not be expected to never grow, change and adapt.  It should not be expected to be perfect all the time.  As we learn what does and doesn’t work with retirement we need to adapt and change.  Likewise as the world changes and society changes our systems will also have to continually adjust to the changing environment.

Yet while our retirement system is still figuring out what works you still need to find the right solution for providing yourself with the funds to take care of yourself and your family.

So how do you account for the changing systems and still make plans for 20, 30, and 40 years from now?

Change Your Mindset

The first thing you need to do is revert your thinking to the “pre-retirement” era style of being responsible for your own retirement.  You are responsible for you.  Don’t rely on a pension or government as they are changing and you don’t know what they are changing to.  Eliminate thinking that others will take care of you and that you have time to figure something out.  Begin today to focus on you creating your own solution to saving for retirement.

Begin Saving for Retirement

The key to having enough money is to save early and often on your own.  You don’t know what Social Security is going to look like in 10 years, you don’t know if your company that has your pension is going to be bankrupt, and you don’t know if you will be healthy enough to work until you die.  The only thing you do know is that YOU will be in your future.  So the sooner you start saving for retirement the better.

No more excuses, no more after the next big event – if your retirement is going to be enjoyable and secure you need to take steps TODAY to make that happen.

Ultimately remember you choose.  Don’t get trapped into victim thinking – you decide, you control your future even if the retirement system is broken.

More Retirement Articles:

Figure Out How Much To Save

Saving if you are more than 10 years away

Top 10 Things to Consider for Retirement Planning

How to Choose Mutual Funds


Agatha says September 25, 2012

I’ve totally nixed social security as a possibility and feel it’s 100% up to me to save for retirement. Luckily, I’m only 33 and have the time to do that. My heart breaks for people that are older and expected social security to be there for them, and it may not be.

Robin says September 25, 2012

You really summed it up well Andrea–we’re responsible for our own future, and “retirement” is a newer concept. The statistics I’m seeing are that people older than 58 will probably get the Social Security they were promised, but that anyone younger than that should expect reduced benefits. Saving is the key. Thanks for an insightful post!

    dillon says September 9, 2013

    Robin says:

    Well said Robin and so true I am 60 years old and receive a pension, If I only knew how bad the economy would
    become 30 years ago I would have saved so much more.
    I was under the Illusion things were ok, “I have a pension and COLA and thought this would be enough”, how
    wrong I was. The State recently stopped all COLA because they say the pension system is not healthy
    because the politicians were allowed to raid our funds and will not pay it back, so, we are left hanging
    out to dry.
    Take this advice from a 60 year old, save save and save some more or you could find yourself in my condition
    old and dependent on a pension with problems. if only I knew, how many times have you heard that “if only I knew”. Thank you Andrea for a well written factual article.

      Andrea says September 10, 2013

      @Dillion thank you for the insight, it is so important for people to hear real life stories like this!

Briana @ How's Married Life says September 25, 2012

Hey Andrea, I’m in debt and have 0 emergency savings. Since I’ll only be 22 in a couple of weeks, do you recommend I wait until the first two things are accomplished (eliminated debt and an emergency fund)?

Shawanda @ You Have More Than You Think says September 25, 2012

I agree. Although I suspect I’ll receive a Social Security check at some point, I don’t believe it’ll cover my living expenses. SS barely does that now for current retirees. If I want to retire (and honestly, I’d much rather find a profession I love so much I never wanna quit), I know making it happen is completely up to me. Still, I think Americans should rely more on their loved ones and their community instead of large corporations and government.

Andrea says September 26, 2012

@Agatha I am with you on that! My retirement plans are based 100% on what I save. Yes too feel so bad for those raised thinking a pension and social security were going to be an option, it really puts them in a bad position.

@Robin Thank you! That is an interesting statistic, had not see it translated to an exact age!

@Briana I always say it will depend on your budget. If you only have $25 extra dollars then you should get a small emergency fund then work on the debt. But if you have an extra $300 you may want to put $100 into investing and the rest to one of the others. It is really important to have some sort of cash for an emergency as that is your life buffer. Then the earlier you invest the more you will have in the long run.

@Shawanda Many people don’t realize how little social security will actually give them! The current maximum for a 66 year old is $2,513 a month & that is the MAX, most people don’t get that. The scary part of working “forever” is that even if we want to our health might not hold out! I agree we do need to get back to being more supportive of each other in every area, from raising kids to retirement. It makes us more connected, healthier and more stable!

Kelly says September 26, 2012

Great advice. We definitely feel like we’re behind on retirement savings, but I guess everyone does these days! I just keep socking away more and more, paying down debt faster, and hope it all works out. There are so many factors including our health and lifespan that are impossible to plan for–it totally scares me!

Carrie Smith says September 26, 2012

I think most of us shouldn’t rely on the government or pensions to support us in retirement. I think we should go back to the days before we had all that and fended for ourselves. At least that’s what I’m doing with my finances. If I get some Social Security or other government income during retirement, that’s great. But I view it as an added bonus since I’m already stashing away funds for my retirement years.

Andrea says September 27, 2012

@Kelly I think that is all we can do, try to do our best. It is hard to know exactly what we will need when we are younger, so I always say get as much as you can in savings and fine tune closer to retirement!

@Carrie I am 100% with you, that is exactly how I approach our investing!

Kelly says September 28, 2012

My husband and I are just at the age in which our own parents are retiring at the same time. One set of family members planned exceptionally well, and the other set planned exceptionally badly. It’s a real eye opener to see where each ended up, and the values regarding money that got them there. Really makes us think about our own retirement and made us feel more confident about the way we’ve set up our own priorities.

    Andrea says September 28, 2012

    It is always interesting to watch what happens to others when they managed differently. We too have parents that all planned very differently, and it is interesting to see how retirement is going! Even more interesting for me is that my grandma’s are still alive and I get to see how different their planning was from each of their kids. I love watching money behavior, it is so fascinating! And of course then learning from watching.

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