In a recent post, I referenced a study published in 2019 by the Aspen Institute. The major take away for me is this: 1 in 5 senior Americans are living in poverty. Some of you are going to react negatively to what I’ve written here and suggest I’m just another liberal hack. Well, maybe I am, but to the extent you don’t want to be included among the 21% or 1 in 5, I encourage you to keep reading.
The study asserts the retirement system in this country is seriously under-performing. America’s poverty rate among seniors, defined as percentage of seniors with incomes less than half of the median household income, is 21%. That’s where the 1 in 5 number comes from, and puts us behind France, Chile, and a few spots ahead of Brazil.
According to the Center for Retirement Research, about 50% of Americans are at risk of not having enough money to maintain their standard of living in retirement. 75% are worried about their ability to achieve a secure retirement. About 60% of working age Americans do not have a retirement account. Meanwhile, our elected leaders are talking about reducing Social Security and Medicare.
So, yes, I think there’s a Retirement Crisis and it will probably get worse before it gets better. Here’s another summary from the same study:
Why does retirement security matter?
For those who work on retirement issues every day, the importance of retirement security is intuitive. For everyone else, retirement can be a low-interest, technical topic, one that can lack the immediacy of other seemingly more pressing concerns. Here are the three key reasons why retirement security is a critical social and economic issue for America.
Inequality – retirement assets are among American’s most important sources of wealth. As with other assets, they are highly unequally distributed based on factors such as income, race, and gender. Increasing retirement security is one of the most powerful tools we have to address America’s growing wealth gap.
Insecurity – retirement insecurity is a major part of America’s growing sense of financial and economic anxiety. This insecurity poses a serious threat to America’s middle class and by extension, to its democracy. Strengthening America’s retirement system is a powerful lever to reduce rising financial and economic insecurity.
Cost – retirement is one of the most important lines in the budgets of both households and governments. When individuals are unprepared for retirement, this can result in a significant cost to governments. The financial and economic return on improvements to America’s retirement system would be material. ( not mentioned is the frightening cost of health care in retirement and how it so often results in bankruptcy – TK)
Unless our societal norms are going to fundamentally change so that people are encouraged to die earlier, we as a society are going to have to come to terms with this problem. How we do that is up for debate, but it has to be part of the national conversation.
Tony Kendzior \ 29 JAN 2020