Here is an excerpt from DealBook on a sobering perspective on a looming retirement crisis followed by a book review of Falling Short: The Coming Retirement Crisis and What to Do About It by Charles D. Ellis.

Feeling pleased that I had survived another year and the annual predictions of the apocalypse, I made the mistake of picking up “Falling Short: The Coming Retirement Crisis and What to Do About It” (Oxford University Press).

Written by Alicia H. Munnell, the director of the Center for Retirement Research at Boston College, with Andrew D. Eschtruth, a colleague there, and Charles D. Ellis, a widely respected consultant and author, “Falling Short” does a fine job of clearly laying out the whats and whys of the impending crisis. It also provides a number of reasonable sounding alternative paths to avoiding financial Armageddon for the coming generations of seniors.

But when I put the book down, I was left with a queasy feeling in my stomach that we are destined to calmly continue down the path we are on until all those reasonable sounding solutions are no longer practical.

There is little debate over the source of the problem. On the one hand, we live longer and require health care that is increasingly costly. On the other hand, we are getting less from both Social Security and employer-sponsored plans, while any nest egg (and few people have much of one) generates little income because of historically low interest rates. The continuing trajectory of requiring more and more and having less and less means that every year that nothing is done, the hope for a sensible resolution in advance of a crisis becomes dimmer.

Nor is there much controversy over the main elements required to avert catastrophe: some combination of working longer, fixing Social Security and encouraging more savings earlier. Indeed, most of the recommendations in “Falling Short” have been made elsewhere by academics and various private and public commissions for years. But nothing much has happened and nothing in “Falling Short” suggests any likely catalyst short of an actual crisis.

See full article via DealBook

Falling Short: The Coming Retirement Crisis and What to Do About It – Description

The United States faces a serious retirement challenge. Many of today’s workers will lack the resources to retire at traditional ages and maintain their standard of living in retirement. Solving the problem is a major challenge in today’s environment in which risk and responsibility have shifted from government and employers to individuals. For this reason, Charles D. Ellis, Alicia H. Munnell, and Andrew D. Eschtruth have written this concise guide for anyone concerned about their own – and the nation’s – retirement security.

Falling Short: The Coming Retirement Crisis and What to Do About It is grounded in sound research yet written in a highly accessible style. The authors provide a vivid picture of the retirement crisis in America. They offer the necessary context for understanding the nature and size of the retirement income shortfall, which is caused by both increasing income needs-due to longer lifespans and rising health costs-and decreasing support from Social Security and employer-sponsored pension plans.

The solutions are to work longer and save more by building on the existing retirement system. To work longer, individuals should plan to stay in the labor force until age 70 if possible. To save more, policymakers should shore up Social Security’s long-term finances; make all 401(k) plans fully automatic, with workers allowed to opt out; and ensure that everyone has access to a retirement savings plan. Individuals should also recognize that their house is a source of saving, which they can tap in retirement through downsizing or a reverse mortgage.

Falling Short: The Coming Retirement Crisis and What to Do About It – Review

Falling Short: The Coming Retirement Crisis and What to Do About It points the way to solving America’s retirement challenge simply by optimizing our existing systems. Make Social Security solvent, make workplace savings plans fully automatic, lift savings rates and extend savings plans to all workers. What are we waiting for? Let’s do it.” – Robert L. Reynolds, President and CEO of Putnam Investments

“I loved this book! It is short, punchy, and highly readable. It provides a full analysis of the grim status of our nation’s retirement savings plans and offers solutions that are realistic and long overdue. I recommend it to all those concerned about America’s retirement problems, including their own.” – John C. Bogle, Founder and Former Chairman and CEO of Vanguard Group

“Illuminating the retirement challenge by combining Munnell and Eschtruth’s keen sense of the academic research with the horse sense of famed investment advisor Ellis is a great idea. Read Falling Short: The Coming Retirement Crisis and What to Do About It; it’s brimming with sound advice. Then pass it along to your brothers and sisters.” – Alan S. Blinder, Professor of Economics at Princeton University and author of After the Music Stopped

“Many baby boomers are woefully unprepared for retirement. This book proposes both useful actions that individuals can take and institutional changes to 401(k)s and Social Security. This gem of a book makes an important contribution to alleviate a pressing social problem.” – Burton Malkiel, Professor Emeritus at Princeton University and author of A Random Walk Down Wall Street

“America’s retirement savings system has failed. Too many people are retiring with too little to live on. This excellent book nails the changes and incentives needed to restore an aging generation to fiscal health. Every voter and policymaker should read it.” – Jane Bryant Quinn, author of Making the Most of Your Money NOW

Falling Short: The Coming Retirement Crisis and What to Do About It by Charles D. Ellis

Falling Short - The Coming Retirement Crisis and What to Do About It