Amounts allocated for retirement soar to $24.2 trillion in 3Q2014

The Investment Company Institute reports, here.

IRA-type instruments continue to lead the way with 30% of the total amount saved, followed by 401k-type plans holding 27%, and government defined benefit plans at all levels 21%.

The latter figure, representing $5.1 trillion, remains remarkable in view of the fact that the taxpayers have contributed significantly to this sum through taxation, on top of funding their own retirements, or not funding them as the case may be.

As recently as 2011 the national average rate of taxpayer contributions to state employee pension plans, and teacher, police and fire retirement plans combined was 13.5%, according to data reported here by The Buckeye Institute. Contrast that with average annual personal savings rates under Bush of just 4% and under Obama of 6%. And for the most recent 5 months of 2014 the rate has fallen to 5%.

Taxpayers are funding the retirements of government workers at a rate more than double their own, which is one reason why most people haven't saved enough for their own retirements. CBS News reported again just weeks ago here that of the 66% who have saved anything for retirement, the majority have saved $25,000 or less.

Meanwhile, government pension plans, as rich as they may appear from the data, may be underfunded long term by as much as $4 trillion, according to The Boston Globe, here.

With a week left before Christmas, maybe you should make do with what you've spent so far, and put something away for a rainy day. It's a comin'.

Social Conservatives Save, Liberals Just Go Into Debt

Social conservatives tax themselves (it's called saving for retirement, now $21.9 trillion saved), liberals tax everyone but never save anything (it's called the Total Public Debt, now $17.3 trillion owed).

Retirement Investments Hit New High In Q3 2012: $19.4 Trillion

The Investment Company Institute has all the data, here.

The old high, before the financial crisis, was reached in 2007 at the level of $17.8 trillion. In 2008 the level of total retirement investments in all categories slipped to a total of $14.1 trillion, a decline of almost 21% as the stock market tanked.

By the end of 2010, however, all the losses were recouped as the level bested 2007 at $17.9 trillion. In 2011 the level climbed again, to $18.0 trillion.

The latest reading in Q3 2012 puts all retirement assets at $19.4 trillion, 9% higher than in 2007, not quite five years on.

The biggest pile of dough, $5.3 trillion, remains in Individual Retirement Accounts, followed by Defined Contribution Plans like 401k accounts, with $5.0 trillion.

Roughly 50% of the American population is not participating in this recovery of retirement accounts because they have nothing in stocks, which under Obama have posted their 4th best performance since World War Two. More precisely, the percentage is probably quite a bit higher than that since just 37% of the stock market is owned by "households", while banks own about 32% of the stock market, the two biggest players if "households" really meant retail investors like mom and pops. It doesn't. But that's another story.

h/t Bloomberg, RushLimbaugh

The Easiest Mortgage Loan Bailout Program Would Let Taxpayers Do It Themselves

According to the Federal Reserve's latest Statistical Release in September, here, the current value of all residential mortgages outstanding is $9.935 trillion.

That's down 5.8 percent from the 2007 peak of $10.542 trillion.

It is estimated that half of all residential mortgages are effectively underwater, meaning homeowners, if they could sell under current conditions, would not make enough from the sale to have 10 percent down for the purchase of a new home. This situation traps people in their homes, keeping them from moving to  take employment or retirement elsewhere.

The easiest solution to this problem is to allow holders of 401K, IRA and similar retirement accounts to withdraw funds without penalty, and perhaps even without taxation, if expressly used for the purchase of a new home, or for retirement of an outstanding mortgage or home equity loan. If not a complete tax forgiveness, government could settle for a flat tax at a low rate on such withdrawals in order to stimulate activity and help solve problems associated with indebtedness.

Holders of IRAs already know only too well that there are few exceptions to withdrawals without penalty. Perhaps the most useful of these few exceptions at present has been withdrawals permitted in certain circumstances for health insurance premium expenditures. Some people who have lost their jobs and their insurance have found this provision particularly helpful during this most severe period of unemployment since the 1930s. It has enabled them to purchase their own health insurance for themselves and their families with the funds.

The provisions permitting such withdrawals should be expanded to permit use of these funds to buy homes elsewhere, or pay off existing mortgages, which would do more than anything government has tried to do to date to stimulate velocity in the housing market.

People have saved plenty of dough to do it, too: $18 trillion.

Here's recent testimony about this from the Investment Company Institute:

Americans currently have more than $18 trillion saved for retirement, with more than half of that amount in defined contribution (DC) plans and individual retirement accounts (IRAs). About half of DC plan and IRA assets are invested in mutual funds, which makes the mutual fund community especially attuned to the needs of retirement savers.

Of course, not all of this money may presently be in the direct control of the individual taxpayers themselves to do with what they please, but a significant portion in IRAs and defined contribution plans, over $9 trillion, might very well be, according to ICI's latest data:

The risk to the retirements of people going forward if they are allowed to liquidate some of these monies is very real, but so is the prospect of a stagnant market of underwater mortgages devolving into bankruptcy, or even precipitating severe economic depression.

People should at least be given the choice under the current circumstances, perhaps with a sunset provision expiring in five years in order to spread out the effect.

A tip of the hat to John Crudele of The New York Post, who continues to argue for this solution in his columns.