Back in 1983 62% of working Americans were covered by Defined Benefit Plans. This type of plan gives a certain amount of monthly income as long as you’re alive and perhaps to ones spouse until they die. This is an expensive plan for the corporate world because they have to make sure the plan has money to do such. Therefore over the years the Defined Benefit Plan has been outcaste by business for the more advantageous 401k where the employee has to save their own money and perhaps be given some matching funds. There is no predetermined monthly income for life associated with this type of plan. What is there when you leave is all you get. The trend is only 11% of working Americans will be covered by Defined Benefit Plans by 2011.

The average working American is saving $696 per month for their retirement years, the median is closer to $352 a month. Is that enough? Let’s take a gander shall we.

If one were to save $352 a month in their 401k plan over 20 years and earned 8% they would have just over $200,000 when they retired. As long as there were no catastrophic events in their life they just might get by on $24,000 ($13,000 SSB + $11,000 interest) a year if everything they possessed were paid in full. Problem is this doesn’t count what you need for healthcare.

A couple who is 65 years old today and retired needs to have an estimated $295,000 on average to cover health care insurance premiums and out of pocket medical expenses alone. That breaks down to about $13,000 a year if they live to 87.

Health care cost has risen from 9% of our economy in 1980 to 16% in 2005 and is projected to be 20% of our economy in 2016. We may need more than $295,000 to cover that cost alone in retirement.

We all know about Social Security so there’s really no need to kick the animal.

Did the investment markets fall because of Greenspan’s leeriness? No I don’t think so. The markets have risen dramatically over the previous months and many were looking for a pull back. Corrections are okay if they are modest, say 5-8%. What happened yesterday was an excuse to blow off some steam and the catalyst was China’s fall. It was interesting to note that those computer programs accentuated they trend. What use to take weeks or months literally took minutes to accomplish, a more efficient market?

It is good to see everyone concerned about the fluctuations of the markets but I wonder how much it affects them directly. There are 22% of Americans that have no plan at all for retirement. When blogs on politics chime in to give insight on investment market events like the venting yesterday I guess it hit’s home that 43% of Americans check their investment holdings on a monthly basis.

We all need to be savers and investors and depend on the government less for the retirement years. Please take time to think about what you are doing now so our children’s children won’t have such a burden to carry and let’s hope the belch we saw yesterday was just that and nothing more.

Thus ends my rant.