MarketWatch's Brett Arends: Retirement Crisis Will Be America's Next Big Disaster
Thursday, 06 Mar 2014 04:15 PM
Studies repeatedly predict huge numbers of aging baby boomers nearing retirement are not saving enough.
Everyone, at least everyone who's informed and sensible, knows it. Yet few people grasp the repercussions, writes MarketWatch columnist Brett Arends. The coming retirement crisis is like the housing bubble of the last decade, he says. Many people recognized the growing bubble but few knew what would happen when the bubble popped.
Arends relates some of the gloomy retirement studies.
Roughly half the population, including 60 percent of low-income workers, may not be able to maintain their standard of living in retirement, according to the Boston College Center for Retirement Research.
The stock market rebound since the recession has helped only slightly, since few Americans own many stocks. A 2010 Federal Reserve survey showed that stocks represent 17 percent of the wealth of high-income earners, 6 percent of middle earners and 2 percent of low earners.
According to the Employee Benefits Research Institute, 43 percent of baby boomers and generation X members are at risk of running out of money in retirement. The institute says 83 percent of the poorest 25 percent of Americans are at risk.
Most workers (66 percent) have less than $50,000 saved for retirement, and 28 percent have less than $1,000 saved.
The EBRI predictions are actually optimistic. It presumes no cuts to Social Security or Medicare and assumes 8 percent returns for stocks and 2 percent returns for bonds. And those are returns not counting inflation or fees.
Many Americans don't even understand the issue. A Natixis survey indicates that most think they're saving enough, but 54 percent don't have a retirement savings plan.
Ed "Ted" Siedle at Forbes outlined how he believes the crisis will play out. Millions of elderly will become impoverished when they become too old to work. Many retirees will have to return to the workforce with some going back to their former employers and others to menial jobs. Expect to see more elderly workers bagging your groceries.
Many baby boomers will cling to their current jobs, but some will be forced out by employers or accept pay cuts or part-time work. Older Americans, even those in their 70s and 80s, will try to continue working even as they become increasingly frail and employers become less willing to hire them, even for part-time work.
Eventually, the crisis will become impossible to ignore as seniors become overwhelmed by health problems, lack of jobs and inadequate savings.
Related Stories:
- 5 Shocking Retirement Facts
- Study: You Need 22 Times Your Desired Annual Income in Retirement Savings
© 2014 Moneynews. All rights reserved.
No comments:
Post a Comment
Thanks for commenting. Your comments are needed for helping to improve the discussion.