Rich Slick from Get Rich Slick had this to say:
Let's do the math. $3.4 trillion divided by 80 million retiring baby boomers = $42,500/american. Average retirement 65 and lifespan 15 years (80 at death)= $2,833.33/year or $236/month.Well, Rich was using the wrong number for his calculation and Barry Ritholtz from The Big Picture called him on it.
Hmm... I don't know of anyone that can live on $236/month unless you are in some fourth world country.
Oh wait, I forgot to add all those free medicaid, medicare, prescription drug benefits everyone is going to get. Hmmm.. I wonder who's going to pay for that.
Hey Slick Rich--Barry was so enamored by the arithmetic that he published a post on his blog titled, "Do the Math"which, at last count had generated 59 comments.
Where did you get the $3.4T number? The starting point was 14.5T -- not 3.4T -- so I get $181,250 spread out over 15 years or 180 months -- Thats ~$1007.
Not much, but better than $236.
Of course, that's assuming an even distribution, which we know isn't remotely the case.
Now, for a couple of fellows who seem to enjoy their calculators, might I suggest that they stop and think for a moment before punching away on the old HP12c. Both boys made three incorrect assumptions. First they assumed that the average American is never going to save another cent and will retire tomorrow. Secondly they assumed that this retirement savings won't earn anything for the next fifteen years, we're apparently just going to keep it under our mattresses. Thirdly they assumed that Americans have no other retirement savings even though the original article stated that retirement assets only account for a little over a third of household financial assets.
If Rich and Barry intended to demonstrate that Americans are woefully prepared for retirement, there's no argument. That's been documented time and time again. But I'm not worried that either of them could ever take my financial planning job. They're just not that good at the math.