Saving for retirement in 2022 is harder than it used to be and many Americans aren’t adequately prepared. Not only are Americans living longer – therefore requiring more savings for their golden years – but safety nets like employer-sponsored pension plans are relics of decades past. Now the onus is on employees, and the responsibilities include setting aside enough money, choosing the right investments and budgeting appropriately. Straight Arrow News contributor Jordan Reid cites a few sobering statistics on the issue and argues the U.S. retirement system is in need of reform.
I’m 41 years old, and I am stressed about retiring. I have specific reasons for this – being a freelancer is its own can of worms – but a great deal of the present stress comes from seeing just how dire the situation is for today’s retirees. Retirement is not, it seems, what we were promised – basically, days of easy, breezy living doled out as a reward for long, hard decades participating in the machine of capitalism.
Today’s retirees are finding that…well, in many cases, they can’t. While COVID may have inspired some to reprioritize and allocate more time to doing the things they love, many others have found themselves suddenly confronted with plummeting 401(k)s, forced early retirement due to job loss, and the rising cost of everyday items…and have had to dramatically rethink their plans as a result.
Baby boomers have lived through the tech bubble, the 2008 housing crash and double-digit inflation in the 1970s, but are currently confronting a perfect storm of inflation, supply chain disruptions, a bear market and skyrocketing gas prices and interest rates. There are fewer workers paying into the social security program, and more and more Boomers hitting an age where they need to rely on it. And the picture that all this paints is unsustainable at best.
According to a BMO Harris pole, a quarter of Americans believe that inflation will force them to delay their retirement, and a recent AARP survey found that 29% of former retirees are either currently working out of financial necessity, or expect that they will have to do so in the near future. 72% of Americans who are nearing retirement won’t have enough to maintain their living standards.
The safety net for retirees is in need of major reform, and there doesn’t seem to be an easy silver-bullet fix. The American tradition of pulling yourself up by your bootstraps – saving during your working years, then reaping the benefits later in life – may work for the upper 5%, but it’s simply not within the realm of possibility for the vast majority.
