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Retirement Crisis: Will This New Proposal Solve It?

Many see the lack of retirement savings among the American population as a retirement crisis waiting to happen, as workers age without the financial safety-net they need after they stop working. But one proposal is aiming to fix this by using a model similar to what some other countries use.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at a proposal to have employers contribute $0.50 per hour to a private universal retirement account. Dan cites proponents' figures that this would generate $1,000 per year in retirement savings, which could build to $160,000 over a 45-year career based on past returns. Dan points out that this is similar to Australia's superannuation scheme, which requires employers to contribute 9.25% to retirement accounts on behalf of their workers. Yet opponents argue that even though these savings are automatic, they could pressure wages downward and make life even harder for the low-income workers that the measure is meant to help.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 12, 2014, at 9:59 AM, carlytx wrote:

    Cant get around the basics. You have to be responsible for your retirement nest egg.The key is to start saving/investing early in life, be consistent, take advantage of any employer matching plan, max out contributions when possible, eliminate debt, avoid risks with your nest egg and plan for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.). There is a great deal of information about retirement available on the web. I use several sites including the site Retirement And Good Living which provides information on finances, health, retirement locations, part time work and also has a great blog of guest posts about a variety of retirement topics.

  • Report this Comment On April 13, 2014, at 10:05 PM, Richard233 wrote:

    So, basically another system like social security. Yet another fund that will eventually be tapped by someone if given a chance.

    The original SS was set up with the idea it would always generate a surplus, but the politicians were too cowardly to automatically adjust the starting age leading to the current situation we have today.

    They used the funds to bankroll one failed social scheme after another. Given half a chance, these funds will be raided by a politician or a banker of some stripe.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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