8 Reasons Your Parents Had an Easier Retirement Than You Will Regardless how old you are now, it’s likely you’ll have a harder time pulling off a financially secure retirement than your parents did. Many of us haven’t planned and saved well, it’s true. But, also, fundamental changes in American life make it harder for today’s generations to achieve a comfortable life after work. 1. We’re living longer The number of Americans 90 and older is expected to quadruple in the next four decades, says the U.S. Census Bureau. In 1935, a 65-year-old would live on average another 12 years. Today, the Social Security Administration says, the average man at 65 can expect to live another 17 1/2 years. The average woman will get 20 more years. Living for 20 years without working takes much more money than getting by for 12 years. If members of your family lived long lives, plan for the chance your retirement savings will need to stretch 30 years or more. 2. Seniors can’t shake the recession The Great Recession robbed more earning power from men and women in their 60s and late 50s than from any other group, The New York Times reports. Home values and investment savings also plummeted, affecting people of all ages. Seniors have less time to make up those losses. Many older workers lost jobs in the recession, or their jobs have shrunk. Workers near retirement have low unemployment rates, the Times says, “but once out of a job, older workers have a much harder time finding another one.” 3. Private pensions are nearly extinct In 1981, large employers covered between 80 and 90 percent of their full-time workers with pensions, guaranteeing retirees and their spouses a fixed monthly payment for life. Those plans, so common 30 years ago, are a pipe dream now. The Bureau of Labor Statistics says that in 2011 just 1 in 10 large employers offered fixed benefit plans and only 18 percent of private industry employees were covered. Now, if we’re lucky, we have 401(k) plans that workers, not investment experts, have to manage. Some employers match a portion of workers’ contributions, others don’t. For example, Facebook, worth an estimated $200 billion, made no matching contributions for employees in 2012 or 2013. 4. Social Security is still under pressure The Social Security Trust Fund reserves are expected to run out in 2034, according to a new report from the Social Security Administration. After that, payments for beneficiaries, which are funded primarily by a payroll tax, would have to be cut overall by 23 percent unless Congress acts. 5. Interest rates are low Retirees in previous generations earned higher interest on savings and low-risk investments. Today’s retirees must take risks in search of income or endure historically low fixed-income returns. Income from interest, dividends and rent fell from 24 percent of total income in 1990 to 11 percent in 2012 for people older than 65, mostly because of falling interest rates, says AARP. 6. Seniors have more debt Our parents’ generations tried to enter retirement with a paid-off home and no debts. That’s harder to do today. USA Today reports that older Americans are taking on increasing amounts of credit card debt and mortgage debt. 7. We’re working longer Americans’ average age at retirement is creeping up, to 62 this year, according to Gallup. It’s the highest since Gallup began asking the question in 1991, when the average retirement age was 57. Workers on average tell Gallup that they expect to retire at 66. But poor health, job loss and the need to care for older parents, grandchildren and ill spouses can cut that short. 8. More seniors are single Divorce is rising among older Americans, and women tend to outlive their husbands. As a result, reports The Fiscal Times, a third of the record 32.7 million Americans who live alone are older than 65. Many find freedom in being single, but it costs more for a single person to support a household than to share overhead. For nearly three-quarters of single Social Security recipients 65 and older, their benefit checks are most or all of their income, according to the National Council on Aging.
Posted on: Fri, 12 Sep 2014 19:47:45 +0000
Trending Topics
Recently Viewed Topics
© 2015