The pending retirement crisis

As scattered readers of this blog know, Social Security is one of my pet topics, but the larger issue is how a whole generation of Americans is utterly unprepared for retirement.  The Associated Press has an article today that sums up a lot of the issues facing the world: "Under siege: The world braces for retirement crisis."

Yes, they use the word "crisis" and it boils down to shifting demographics and how they affect government, business, and workers.  Across the globe, governments are broke, companies are squeezed, and workers are irresponsible:

The crisis is a convergence of three factors:
-- Countries are slashing retirement benefits and raising the age to start collecting them. These countries are awash in debt since the recession hit. And they face a demographics disaster as retirees live longer and falling birth rates mean there will be fewer workers to support them.
-- Companies have eliminated traditional pension plans that guaranteed employees a monthly check in retirement.
-- Individuals spent freely and failed to save before the recession and saw much of their wealth disappear once it hit.

To the first point, I've noted how there's this irrational affection for a retirement program forged during the Depression when there were 42 workers supporting every retiree.  To the second point, like Social Security, it's well and good to long for the days when companies paid lifetime benefits, but they're gone.  It's in the past and wishing this was the 1950s won't make it so.  This makes the third point all the more heartbreaking: Americans should acknowledge this shifting reality and adjust accordingly.  But in the AP article provides one story of heartache that comes across as sheer brainlessness:

Leslie Lynch, 52, of Glastonbury, Conn., had $30,000 in her 401(k) retirement account when she lost her $65,000-a-year job last year at an insurance company. She'd worked there 28 years. She's depleted her retirement savings trying to stay afloat.
"I don't believe that I will ever retire now," she says.

No sh-t, Sherlock.  You have got to be kidding me: unless Ms. Lynch had her entire portfolio in Blockbuster Video stock, this is a shockingly irresponsible approach to retirement.  Assuming an extremely conservative annual return on investment of 4%, this means that she invested $50 a month - less than 1% of her annual salary - on savings for retirement.  Maybe Leslie believed the mythology built during the Great Society but younger Americans see the handwriting on the wall.