Tag Archives: golden-years

04.23.25
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Housing: A Major Impediment to Saving for Retirement

By: Russ Kamp, CEO, Ryan ALM, Inc.

The demise of defined benefit (DB) pensions is putting great financial pressure on individuals to save for retirement through a defined contribution (DC) program. I’ve often railed about asking untrained individuals to take on the responsibility to fund, manage, and then disburse a “benefit” through a DC plan, arguing that most Americans don’t have the necessary disposable income, investment acumen, or a crystal ball to help with longevity issues.

Many (most)Americans are financially strapped and there are many contributors to this crisis, including student loan debt, monthly childcare expenses, food, medical insurance, car/home insurance, and housing costs to name but a few. I could address each of these and the impact that they have on the average American worker, but let’s focus on housing today. The cost of buying and maintaining a residence is suffocating. Property taxes often add the equivalence of a monthly “mortgage” on top of one’s monthly mortgage, especially if you live in high tax states such as New Jersey.

Here are some startling facts when comparing the impact of housing costs on families from the 1950s to today’s circumstances. It wasn’t unusual to have only one member of a couple (mostly the male) working outside the home in the 1950s. That ability has nearly vanished today. Why? Well for one, the average home was <$7,400 in the early ’50s and the average family income was roughly $3,300. So, for slightly more than 2Xs one’s family income you could own your roughly 1,000 square foot home.

Today, the median home is priced at $431k according to Redfin, while the median household income is <$80k. Maryland leads that way at just over $94,000, while Mississippi trails all states at $44k. It now costs more than 5Xs one’s family income to purchase a home in the U.S. By the way, the “average” home in the ’50s would be worth about $98k in today’s $s so about 23% of what it actually costs to buy today. Oh, my! The housing market has dramatically outpaced inflation during the last 7 decades, and there doesn’t seem to be an end to the escalation despite the greater home prices and today’s interest rate environment.

Just the housing costs alone are a great burden of the American worker. Add to this expenditure all that was mentioned above and then some, and you shouldn’t be surprised that median 401(k) balances are as anemic as they are. Let’s work together to bring back traditional DB plans so that most Americans will have a decent opportunity to retire before their 80th birthday!

10.02.24
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Welcome to National Retirement (in)Security Month!

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

October isn’t just for leaf peepers, although it is a special time of year for those of us living in the Northeast. Importantly, October is also National Retirement Security Month. For those of you who regularly follow this blog, you know that we (at Ryan ALM, Inc.) are huge supporters of DB pension plans. Fortunately, we aren’t the only ones. In a wonderful post published by the National Public Pension Coalition, Ariel McConnell writes about the importance of supporting public pension plans, as well as those sponsored by private organizations.

Ms. McConnell highlights many concerns regarding the current state of retirement readiness among American workers. Frighteningly, she points out that 57% of Americans don’t have any retirement savings, and those with 401(k)s have a median balance of only $27,376. That will barely provide you with the financial resources to get you through one year let alone a retirement that could stretch well beyond 20 years. She also highlights how each of us can become more active in the fight to get every American ready for their retirement. We want each worker to have the chance to enjoy their “golden years”. Let’s not let poor policy decisions tarnish that dream.

Please join Ariel, the National Public Pension Coalition, Ryan ALM, Inc., and many more organizations in the fight to protect and preserve defined benefit plans for all. I can only begin to guess at the significant economic and social consequences if our Senior population is forced to live on a median balance as insignificant as the one mentioned in NPPC’s blog post.