Scary Statistics on Retirement Readiness

Just in time for Halloween, two reports published earlier this week included some scary information about American workers’ retirement readiness.

Social Security Concerns

Less than half of workers —  44% — believe that income from Social Security, pensions and annuities will cover their basic living expenses while they are retired, LIMRA’s Secure Retirement Institute (SRI) found. SRI also points out that there are predictions that the Social Security Trust Fund could run dry in 15 years.

Debt

Noting that pre- and current retirees have big debt concerns, Marlene Satter of BenefitsPRO cites data from Experian showing that members of Generation X have an average student loan debt balance of $39,584, and Baby Boomers have one of $34,703. And for good measure, those balances rose by 7% in the first quarter of 2019. And SRI found that 30% of retirees have mortgages, almost double the percentage from 30 years ago.

The big picture is sobering, too. BenefitsPRO reports that consumer debt exceeds $14 trillion, and that Experian says Baby Boomers have an average consumer debt of just over $95,000. And, SRI says, one-third of Americans have debt in collections.

Health

Health care expenses during retirement loom large, SRI suggests, pointing out that approximately 80% of older adults have one or more chronic diseases, and 68% have two or more.

Financial Illiteracy

The “monster hiding under the bed” is how Satter describes financial illiteracy, saying that “one thing that gets people into trouble with money is a complete lack of understanding about how it works and where the pitfalls are.” And SRI found that just 13% of Americans say they are “very knowledgeable about financial products and investments.”

Saving Rates

Just over 20% of Americans save nothing, according to Bankrate statistics Satter cited. Furthermore, another 20% save less than 5% of their income. Forty-five percent of employed Baby Boomers have saved less than $100,000 for retirement, and 28% have less than $25,000 saved for that purpose, SRI says. And SRI indicates that people know saving is a problem, reporting that it found that 53% of Americans believe that they will outlive their savings and investments if they reach age 90. Further, they found that 44% of workers who are not saving for retirement say they will not be able to afford to retire.

Income

Real wages fell 1.3% from 2017 to 2018, according to PayScale, noted Satter. And SRI found that one in seven Americans older than age 65 live in poverty.

Long-Term

SRI found that 70% of pre-retirees consider themselves poorly prepared for retirement. And Satter says that the retirement “plan” for 80% of Americans is simply to continue working.