of U.S. households headed by a person 55 and over havenít
stashed away any retirement savings.
while old-style pensions will help some of them put food
on the table, 29 percent of such households donít have
data in a report by the U.S. Government Accountability
Office paint a sorry picture of a nation on the verge of
massive growth in its retiree population. Between this
year and 2030, the number of people over 65 will grow 50
percent to 74 million retirees, accounting for 20
percent of the population.
2034 is the year the Social Security trust fund is
expected to run dry. Although FICA deductions from
paychecks will keep some money flowing to retirees, the
Social Security system will be able to pay only 75
percent of the benefits workers have been promised.
Since Social Security is essential to many retirees, any
decrease would be painful.
not only the non-savers who face a troubled future.
Although 59 percent of people 55 to 64 have some
savings, the amounts are often tiny. In that group,
about half have accumulated just $104,000 or less; 24
percent have $25,000 in savings or less. While studies
show most people have no idea what will be enough in
retirement, $104,000 is clearly bare-bones at best.
a person put all $104,000 into an annuity that adjusts
for inflation, that annuity would start out providing
just $310 a month. A person could count on these modest
checks, with tiny increases for inflation, over the
course of retirement. Todayís average monthly Social
Security check is about $1,330, so consider what $1,640
monthly from savings and Social Security combined would
report notes that various studies have found between a
third and two-thirds of workers are at risk of ending up
in retirement without enough money to carry on their
current lifestyles. While the lowest-income workers are
in the worst shape, about 43 percent of people in the
top third of incomes also wonít be able to maintain
their standard of living, according to the Center for
Retirement Research at Boston College.
popular notion for those with deficient savings is to
try to make up for lost time by working longer. But the
GAO suggests people are "overestimating" what
they will likely accomplish with that strategy.
have shown that people tend to retire earlier than they
hoped due to illness, layoffs, family needs or changes
in their workplaces. A study by the Employee Benefit
Research Institute found that while half of people over
55 plan to delay retirement to 66 or later, only 14
percent of current retirees lasted in the workplace that
long. According to a 2012 Health and Retirement Study,
43 percent of retirees felt forced into retirement.
GAO noted that the 2007 to 2009 recession demonstrated
what can go wrong. Amid job losses in the recession,
about 21 percent of people age 55 to 64 ended up
retiring earlier than they expected and could no longer
most current retirees are getting by on the money they
have available. Social Security is significant for
people at all income levels and especially for those who
earned little in their working years. In the latest U.S.
census, about 43 percent of people over 65 would have
been in poverty ($13,878) if not for Social Security.
people age 65 to 74, Social Security provides 44 percent
of retirement income for those with incomes at the
median level of $47,000. Only 4 percent of that income
comes from a householdís savings. Old-style pensions
also help, but companies have been cutting back on
pensions. So fewer future retirees will have the benefit
means individuals need to amass more savings themselves,
and people at higher income levels will need to save the
most because Social Security replaces a lower percentage
of income for people at the higher levels. For example,
among people between 65 and 74 with incomes of $76,000,
Social Security makes up about 31 percent of their
good news for people who need to save the most is that
people in higher-paying jobs tend to have 401(k)-type
retirement saving plans at work. The bad news is that
too many people save inadequately even when they have
such plans. An Aon Hewitt study estimated in 2012 that
71 percent of people who worked continuously in jobs
with 401(k) plans for 30 years wouldnít have enough
money for retirement.
is a difference of opinion among experts about what it
takes to keep up a lifestyle. Some suggest enough
savings to replace 70 percent of your last annual
salary. Aon suggests being able to replace 85 percent.
To test your own savings try the ballpark estimate at