Is anyone saving enough for retirement?
Probably not, and it’s not a particularly new insight. The United States has been bracing for a looming retirement crisis for decades, according to years of research (for instance, 2018, 2015 and 2011).
But these days, there’s more data available to create a fuller picture. Take longevity. For the most part, life expectancy in the U.S. has been steadily rising for the last 100 years. In 1900, you might expect to live to see age 47; by 2019, the average citizen could expect to live to nearly 79. Life expectancy started slipping in 2020 — largely as a consequence of COVID-19 — and by 2021 (the most recent data available), it fell to just over 76. In any event, most people still have to account for some 20 years of life in retirement.
At the same time, the income gap has been widening — and, unlike longevity, that continues to barrel along. Older Americans are especially vulnerable, with some 47 million households financially struggling or at risk of falling into economic insecurity as they age, according to analysis by the National Council on Aging (NCOA).
That soaring divide between wealthy and poor Americans hurts the Social Security system, because a record share of Americans' incomes is not subject to the Social Security tax. In fact, earnings taxed for Social Security is at a nearly 50-year low, says a new report from the Economic Policy Institute.
Add in the inadequate retirement savings of most Americans and the picture is kind of bleak. The latest Federal Reserve Survey of Consumer Finances found that Americans between the age of 55 and 64 held a median savings amount of $134,000 — not enough for most people to maintain their pre-retirement lifestyle, even with Social Security.
Still, you can take steps to improve your own situation. The NCOA collaborated with Nationwide and the LeadingAge LTSS Center @UMass Boston on four strategies that can help make your money go farther in retirement:
- Make sure you take advantage of all your benefits
- Claim Social Security at the optimal time
- Plan for long-term care services
- Don’t forget about home equity
It’s clear that as the coming retirement crisis gets worse, you’ll need all the tools you can get. For more, here’s our reporter Brenden Rearick’s
story on this issue.
— Jill Cornfield, deputy editor
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