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Americans say they don’t have enough money for retirement and a significant portion have no savings at all.
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It’s part of a growing pension crisis that many can’t afford to throw in the towel on.
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At the same time, the economy is on the verge of the Peak Boomer generation retiring and depleting their savings.
Pam Tourangeau said at 68, she doesn’t have much of a nest egg.
She still works part-time as a therapist, but says she’s slowing down: “Fatigue is a big part of getting older.”
She recalled that her ex-father-in-law had a large pension when he retired – a practice that is far less common these days. As the Congressional Research Service noted, defined contribution plans, which are retirement plans such as 401(k)s that are based on employee contributions and subject to market fluctuations, began to overtake defined benefit plans, which include pensions, in the mid-1980s.
“They don’t do that anymore,” she said. She feels that baby boomers are stuck in a generation gap – too young to retire but too old to truly be part of the tech boom.
“I was all about love, peace and let’s be happy. But money wasn’t the focus,” she said. “Now it has suddenly become a problem.”
Tourangeau is part of a generation of older Americans who are unsure of their financial situation. This means the pension crisis could get worse.
On Wednesday, AARP released the results of a January survey looking at retirement prospects for Americans ages 50 and older. It turns out that many of them are unsure of their finances. Specifically, one in five older Americans surveyed said they have no retirement savings, and more than half of them do not believe they will have enough money to stay afloat in retirement.
Inflation is putting even more strain on their finances – according to the survey results, 37% of respondents aged 50 and older were worried about whether they would be able to afford basic expenses like housing and food, and 70% worried that everyday prices would rise faster than that Income. Given all of these economic stresses, 26% of older adults who are not currently retired say they never expect to retire.
“Every adult in America deserves to retire with dignity and financial security,” Indira Venkateswaran, AARP senior vice president of research, said in a statement. “However, far too many people do not have access to retirement savings options and this, coupled with higher prices, is making it increasingly difficult for people to decide when to retire.”
“Everyday expenses continue to be the biggest barrier to saving more for retirement, and some older Americans say they never expect to retire,” Venkateswaran added.
Many older Americans still work. While the U.S. civilian workforce ages 55 and older is high, the labor force participation rate of those age 55 and older remains below pre-pandemic rates as of February 2020. You must rely on the retirement savings you have built up.
Still, only a small share of older Americans who were not yet retired said they and their spouse or partner would need less than $50,000 for retirement.
During a briefing Wednesday, AARP Executive Vice President and Chief Advocacy & Engagement Officer Nancy LeaMond told reporters that the survey will be “a wake-up call for every adult, young and old, as well as for federal and state policymakers.” She pointed to some AARP-backed legislative initiatives that would strengthen retirement security for older adults, including the bipartisan Retirement Savings for Americans Act, which allows the government to double contributions to savings accounts for low- and middle-income workers.
“We know that Americans are far more likely to save for retirement if they can do so through a work-based option,” LeaMond said.
This new data comes as the country prepares for an onslaught of retiring top boomers. These are Americans who were born between 1959 and 1964 and will turn 65 this year. They are the last baby boomers to retire and the largest baby boomer cohort to start throwing in the towel.
An analysis of Federal Reserve and University of Michigan Health and Retirement study data by the Alliance for Lifetime Income’s Retirement Income Institute found that just over half of top boomers have assets of $250,000 or less. That means many will likely deplete their savings and rely on Social Security to stay afloat – a benefit that is already potentially at risk since Social Security only has enough money to continue paying out full benefits over the next decade .
Are you a top boomer or an older American worried about not having enough money for retirement? Contact these reporters at [email protected], [email protected]And [email protected].
Read the original article on Business Insider