everyone has their own unique views and needs when it comes to financial success if you'd like to leave your financial woes behind and live a life of Financial Freedom you've come to the right place welcome to the saving with Steve show hosted by Steve Sexton the show will help you with the ins and outs of money we talked about financial issues that could be costing you thousands of dollars and keeping you up at night we talked about money tax reduction saving more spending less 401K risk management retirement and everything under the sun that relates to you having a healthier happy relationship with money now here is your host of saving with Steve Steve Sexton the same thing with Steve<br> the ins-and-outs of money pretty much everything in the Sun<br> really see you having a happier or healthier relationship when the money my name is Steve sex and I want to thank you for joining us today we have a very interesting show so let's talk a little bit about this problem we are retired about retirement in your a seen some of this if your focus on economics you probably know some of this but it when we look at the American retirement system system it's been designed many many decades ago and it no longer meets the majority retirees now a long time ago it's Friday gun 33 still points one was a pension Social Security and then somebody's personal savings well you know that really doesn't work anymore because the whole landscape to Skipton is shifted and it started back in 2000 or even earlier when private pensions pretty much went away mean in fact Microsoft pensions went away in 2008 Social Security spacing insolvency we cease<br> I keep seeing it 10-12 years out gay people are living longer which wasn't expected by social security health care costs continue to rise results many retirees face in agonizing choice between buying Essentials and importing prescription medication so Martin Bailey and Ben Harris are the hours of the book the retirement challenge we're lucky to have been here but Mark Martin and Ben their respect Economist with extensive experience in both Academia and government martinvale he's a senior fellow at the Brookings Institute serve the chairman of The Economic Council adviser to the President Clinton then here is the former economic adviser to President Joe Biden currently holds the position of assistant Secretary of the Treasury Freakonomics policy so we have some very highly educated very smart people here to talk to us about it today Ben's going to be discussing with us the problems the solutions and most importantly what you can do<br> hey welcome to the show we're really glad you're here thanks. Thanks for having me and throw me on your show and talking about what's a very important issue for the American people so let's just get your right into it no big deal<br> things here how is Americans current retirement system system affected individuals and and the economy so the big question I know I think I think it's important to maybe start with a few notes on what it means to have an adequate Retirement System in so people have lost different ways to Define with adequate the way the economist 10 to look at adequacy of retirement is basically can you maintain the standard of living that you enjoyed throughout your working lives in retirement so are we seeing people you know who you were may be solidly middle-class retirement but then they kind of start to live on the cusp of poverty in retirement that would be an example of a failed retirement system so you should build a living retirement roughly the same stair living that you live throughout your working life that success from a retirement perspective we have various ways of measuring whether or not it actually is me<br> one way is to look at you know how people consumption patterns Berry be right before retirement right after people that antenna do pretty good on that metric a second to look at people's finances earlier on in their lives and then say look you continue on this path how are you going to be in retirement the Boston College Center for Retirement Research put that was called the national retirement index which does suggest that it was the people who were younger than 65 and says are you on track be in good shape especially good news there so they came out with a new annual measurement the other day and found it 39% of people were at rest which means that a majority of people 61% or not at risk and and that's actually quite a big Improvement but then it was from 3 years ago and we actually saw you're going back to the mid-2000s up to fifty percent of people are doing better<br> largely due to Ashley Gaines and house prices which create a lot of wealth American families and a red hot stock market so overall I think you want to characterize retirement system getting back to your original question is one that works okay for a lot of people and fall short for some others and the other big thing yes but how it affect the economy as a country we spend an enormous resources devoted to retirement we spend over 10% of GDP largely through the federal government building towards retirement programs and the population so it's it's a massive investment in retirement and you know it's really one of our our biggest National priorities<br> So when you say the federal government's or are we talkin about social security Medicare Medicaid all those type of things that I look at it is you've got Social Security retirement sometimes it goes for people with disabilities or four children people who were disabled but most of it goes towards old age spending ever see all of Medicare covers for retirees and about a third of Medicaid also goes for retirees large for nursing homes in older care for people with long-term disabilities but we also have on top of all that spending we also have round 250 billion dollars every year in tax incentives for contributing to retirement accounts see you add this all up in your getting over 10% of GDP in about his retirement I just want to make sure I understood what that really meant<br> should I keep going on there I I love this the challenges for the current system the one thing to really notice about changes in the system as what you mention from the outset which is we went from the system where everyone has Social Security and she are a very fortunate workers have these defined-benefit pensions where you're getting an anti monthly check that's based on some combination of how long you're the company for your final wage was at and you knew you were getting this monthly check I you know until you died but sometimes your spouse is it would also get a check if your spouse happen. Love you deeply changed I mean virtually now some people are still getting their Define benefit checks but almost no one is really very few workers today or are getting that what people are gay<br> Define contribution account is like a 401k account where you own everything in your account you got a balance and it's not necessarily good is chili bad different and the way that is different is a lot more onus put on the individual worker it's up to you to make the contributions it's up to you to manage the Investments and it's up to you to manage how you spend down this account over time the real Central problem with American retirement there a lot of problems but I think the biggest problem is that it is not well suited to address the biggest risk in retirement which is unknown longevity we have no idea how are we to live I don't know how long I'm going to live my parents during their late seventies we don't know how long they're going to live and is a really tough question right is so if you're playing to live at 65 until age 65<br> you're going to die in the next 10 years there's a pretty good chance you're going to live to your 90s and like how do you account for that I was standing wrist it's a really tough question I say not knowing how long you going to live and so what do people do well a lot of people don't have the finances to stay and I just rely on Social Security and don't get her social security check every month they'll get their Medicare benefits but a lot of people have small nest eggs and lot of people lived also have big nest of eggs what they have to do is they have to over save to account for the fact that they don't know how long they're going to live for it we must be easier to save if you could tell me the year I was going to die because I'm here I really have no idea so I have to save a ton of money to account for unknown longevity risk and then I kind of have to hold it and retirement so what you see with a lot of retirees and I talked to<br> to confirm this which is a lot of people down this hard-earned Money Retirement because they are scared about being old and poor or they're scared about needing long-term care and they don't want to rely on their kids so that's the biggest problem which is the current system does a lot of things right it generates a lot of wells for people but it doesn't handle the fact we just don't know how long I'm going to live and we don't know what are health care expenses<br> health care expenses are getting larger and larger and he should every year as people get older and then system gets more expensive and then you add in a little bit of risk cuz we've had a wonderful stock market you know why but that doesn't always hold true so it's it's it's those things following as well and then you have inflation I mean quite frankly people expenses are up by more than 20% over the last three years and that's just inflation and that's not going to go down because workers and retirees against inflation better than people under 65 Social Security's indexed to inflation if prices go up Social Security goes out by the same amount Medicare and practice is index 2 medical inflation your benefits are not going to change so so so I agree with you there is risk on inflation and a whole host of other metrics<br> Ashley people age older than 65 or a little better protected against inflation in those younger than 2<br>more expert advice for having a happier relationship with money still to come on the saving with Steve show<br> don't let your financial woes keep you up at night and prevent you from living a life of Financial and personal freedom hi I'm Steve Sexton post of the saving with Steve show where did he talk about the ins-and-outs of money it was Financial issues that could be costing me thousands of dollars causing stress keeping you up at night we're going to talk about money tax reduction saving more spending your investment risk management retirement and everything is so she ate it with you having a healthier happy relationship with money soon as you've ever dreamed of living a life of Financial and personal freedom you owe it to yourself and your family to tune in to the saving with Steve show join me Steve sex and out of saving with Steve show as we talked about everything under the sun when it comes to money to learn more about the show visit saving with Steve. Us that's saving with Steve. Us saving with Steve. Us will see you soon<br> welcome back to the show that is here to help you achieve your financial goals it's the saving with Steve show now here's your host Steve Sexton<br> hey welcome back to the saving with Steve show where we talked about the ins-and-outs of money I'm going to truly thank you for tuning in and appreciate you for letting your friends family and Associates know about the show all the replacer available at ww.w saving with Steve. Us if you're enjoying the stories of helpful information inside on saving with Steve and I encourage you to describe your YouTube channel never misses show check in at the check out a few of our Affiliates at UK Health radio BBS radio talk radio New York City e360 TV Las Vegas TV network all these networks are dedicated to empowering you to solve problems of lift your spirits and live a life of personal financial Freedom spell let's get back here with some Ben Harrison let's talk about this American retirement challenge<br> let's start talking about some of the solutions<br> to correcting this problem and how do you policymakers employers individuals fit into supporting whatever reforms that are that you know that are being proposed and you know what I think those are that's really really important cuz a lot of times you know what policy makers have different agendas as you well know living in that world so or actually working with that world so help us understand you know what what the solution is what policymakers need to do and how it everyday individuals can get involved yes so the reason that Martin I wrote this book was because he wanted a practical plausible book a framework that the makers could use when they're starting to think about retirement security so was in Washington d.c. you got a lot of big thinkers in a lot of times people come in and look at the retirement system and safe the whole thing<br> you know let's just get rid of 401ks and everyone has mandated pension retirement system we have 30 trillion dollars and wealth invested in the retirement system Social Security Medicare incredibly popular blowing it up and just not going to happen and honestly don't think it should so we want to come in with with a set of reforms which were tractable and realistic for for policymakers owl say in Broad broad Strokes we have two different sets of reforms do we suggest the first looks at how people accumulated funds for retirement and in right now we have a system where is Philly upside down on I-80. I mentioned earlier that there's about two hundred fifty billion dollars in tax incentives for retirement saving every year I think it's a good thing and well you know it is costly in terms of<br> maybe crowding out other government programs but on the whole I think it's that's really good thing the problem is is not really targeted towards the type of people who you would want we targeted too so we know about 70% of that 250 billion dollars goes to the wealthiest 1/5 of people and that's because they have the money to go ahead and and save would be there also working in employee words that have these type of retirement plan but also is based on your tax rate so the more taxes you pay the more valuable it is to contribute $2 to a particular account not to say that I prefer can people shouldn't get access to retirement savings times but it really should give you design the system from scratch you wouldn't have 70% doing to the top 5th so we sail it was just so much tea for one case but make the saving son as a little more valuable for people in the middle for middle-class people that's a set of reforms<br> you know along with that also lets me go easier to contribute to your Workforce saving plans so right now a lot of places have this often you have to actually go and sign up that may not sound like a big hurdle but it actually is for a lot of people as confusing as complicated and a lot of people just go with inertia which is the easiest thing to do which is not sign up for the account we should have the default but you have to actually say look I don't want to save for retirement and rather the default being not saving it all and those two weeks to the system automatic enrollment and slightly more generous benefits for middle-income Savers would mean the world to people when it comes to saving up there nesting<br> I say I say I actually agree with that is one of the biggest issues is getting started saving now is there any incentives for the employer's to match I know there's not a whole ton of a match anymore but is there any incentives that in your book or that are there incentives for he would do you recommend incentives for employers for tax basis to encourage a larger match players of the ones who have set up his retirement savings accounts they don't have to do they do it as a recruiting tool and they do it because they care about their workers and they've been they've been trusted partner and so I think they deserve credit and so one of the things that Martin I suggest our<br> tax credits for employers who want to go ahead and set up these accounts you know those who are currently offering them really small businesses you know some of their cost for most of the cost of setting up the account should be paid and you just create a little friction very little obstacles to actually settings accounts in the first place so how do they get involved with this what can they do do they need to start pushing with their employers and legislators what would be the way to have that work yes I think so you know earlier I said that's the first thing problem was around the accumulation side of things the second big problem is around the D cumulation which is a fancy economic term for just how you're spending down your nest egg right now<br> we don't really have good insurance markets for people who want to spend down their nest egg and by that I mean we don't have good market for private sector products where maybe you get to eat you know the age 65 and you got $1,000 to $1,000 billion million dollars and well we don't have great ways for people to translate all that well they spent forty or fifty years building up into retirement security so we don't have very good markets for annuities you know annuities are kind of the classic product for dealing with that longevity risk we talked about at the beginning a second product which is underutilized and has kind of a screwed-up market are reverse mortgages so reverse mortgages are definitely not for everyone but if you're a person who gets the age 65 rh70 and you got a half a million dollar house that you mostly paid off but only have you know 10 or $15,000 in the 401K we wouldn't consider that person or they've got half million dollars and well<br> I just tied up in the house so reverse mortgages are good products for hap helping people access that well and having a little more income for a tirement and then also long-term care and watch a a big problem in this country the markets are just completely backwards and ultimately it is driven up prices for receiving that car so we need better markets there so what can people do I mean the first thing that people can do is you know always become involved in the policy making process contact you or your representatives and say look I want a better system for retirement I want more generous tax credits for when I save and I want better Insurance markets for when I want to go ahead and actually create some security retirement for the second thing that people can do I think has to do around you no education and information you can with your own networks a lot of times people don't<br> listen to people like like me sitting here and I think tank with the Brookings institution or you know when I was assistant treasury secretary people listened to their friends it was Noah's family and it was in their neighbors and so being a source of really high-quality accurate information isn't just good for you is good for your social network as well so I agree I'm listen to the right person we've all heard the stories for the neighbors and how they made millions of dollars but yet they still don't have anything so I agree with you need to listen to the right people so he then I want to thank you so much for being on the show where can our listeners go and read the retirement challenge how can they go about getting your book so you can find it on Amazon the publisher is Oxford University press Barnes & Noble any major booksellers can go ahead and find it there<br> very much I appreciate you being on the show today this was a very interesting topic but it's a topic that's needed I think there's you know what when things are going well great the system seems a lot better but when we have a couple years like we hadn't 2000-2001 2002 where you have a a market that decline for three years straight and then a few years after we had two thousand eight it was probably looking at a different picture so you know those pictures are going to change in those numbers you talked about having people not be a risk of retirement does that's going to have them flow but it's important that everybody start focusing on their retirement and I think this is wonderful what you're doing and I appreciate that and I give appreciate you being on the shower thanks to you thanks for having this is great and you have a wonderful day stay safe and we'll see you next time I'm saving the sea<br> more expert advice for having a happier relationship with money still to come on the saving with Steve show<br> don't let your financial woes keep you up at night and prevent you from living a life of Financial and personal freedom hi I'm Steve Sexton post of the saving with Steve show where to be talking about the ins-and-outs of money Hills financial issues it could be costing me thousands of dollars causing stress keeping you up at night we're going to talk about money tax reduction saving more spending your investment risk management retirement and everything is so sweet with you having a healthier happy relationship with money soon as you've ever dreamed of living a life of Financial and personal freedom you owe it to yourself and your family to tune into the saving with Steve show join me Steve section of the saving with Steve show as we talked about everything under the sun when it comes to money to learn more about the show visit saving with Steve. Us that's saving with Steve. Us saving with Steve. Us will see you soon<br> welcome back to the show that is here to help you achieve your financial goals it's the saving with Steve show now here's your host Steve Sexton<br> hey welcome back to the saving with Steve show where we talked about the ins-and-outs of money I want to start talking about that Magnificent Seven okay and if you haven't heard the Magnificent Seven they used to be the Magnificent N Vac 10 years ago were these 10 companies were responsible for about 9% of the S&P 500 grow okay then we started focus on the Magnificent Seven and however the concern today is there's only really for companies out of the seven that are carrying the weight which means the Groth of in the S&P and those are Amazon Microsoft meta and the video they account for 69% of the snp's games think about that for stock 69%<br> what's happening is it went from 10 to 7 to 4 so there's a shrinking number of stocks leading averages higher let's take a trip back to Memory Lane and look at what happened in the year two thousand two thousand one when the tech Bubble Burst yes there's a lot of these companies that were doing really well and all of a sudden boom they stopped<br> pretty soon we're going to have a final two and then comes March Madness yes we're in March folks the question here for this is the money that you have set aside to create the income that Sable gave it to you to support maintain your lifestyle your Purpose Driven money<br> the money that has an obligation should be subject to<br> Pro Stock that could lose value what would happen if those Red Sox lose value and your whole portfolio is focused on growth in that creating an income for yourself you're not protecting that ends well<br> hey if your dividends hard enough then you have to liquidate cannibalize stock to support your income which means you're reducing your portfolio<br> or you have to say hey we're going to have to wait and father likes to have to get back to where we were some folks this is powerful and you know what a lot of people are talking about this and it will affect your lifestyle so it's really important that you look at your money in the wear of performance money this is the money that doesn't have an obligation that you know what when you look at the market you see it always goes up into the right that's great but the volatility side of it cuz they are so for example in 2005 mean to send the last 24 months OK Google your performance money hey if you didn't take any money I got to even and you know it might even go higher down the road and this is the money that's okay if there's economic viruses because you know what given time<br> God willing you live through the virus in your money will go back up that's your performance money purpose money is the money that you're using to support and maintain your lifestyle the money you need now and the reality is time is not the Ally of purpose money because you need it now because if it's not there you either have to cannibalize other things<br> in or suspend your license now so it's important that you take a look at what's going on your life and your finances as your purpose money or performance money just make sure that purpose money is protected within a helmet and thank you for being with us here in staving was Steve we had the American challenge author been here is here outstanding he and Martin put together a wonderful book called The American Challenge and it's talking about reforming the retirement system so everybody has that the income that they had when they're working to support sustain their lifestyle as long as they made it they do so stick with it look forward to seeing you next time right here on saving with Steve stayed healthy stay safe bye bye a more savings Steve<br> thank you for joining us for the saving with Steve show hosted by Steve Sexton to learn more about the show and how to become a guest or sponsor visit saving with Steve. Us that's saving with Steve. Us join us again next time as we continue to talk about everything under the sun that relates to you having a healthier happier relationship with money this has been the saving with Steve show hosted by Steve Sexton<br>