Saving for retirement is getting harder and in need of major 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. 

Biden has proposed ramping up Social Security benefits and shifting tax advantages from the upper-middle class to assist lower-wage workers, but we’d need a unified Congress to make this a reality. We need to break the cycle of favoring employers over labor unions, and ensure that the government provides taxpayers with additional options – fund diversification, savings incentives, and lifetime annuities – that supplement Social Security, rather than replacing it. 

Short story: The crisis for our retirees should be a bipartisan issue that addresses both the shifting makeup of the population and fluctuations in our economy. And right now, we’re failing our retirees in a major, major way.