If you’ve read any retirement-related headlines lately, it’s no secret that there’s a real retirement problem in America. We’re doing a bad job of saving money, Social Security isn’t far away from being in real trouble, and costs are rising. Fortunately, there’s something you can do about it, so your retirement situation won’t be a cautionary tale for the younger generations.
Americans are doing a poor job of saving for retirement
This is no big secret, but many people don’t realize just how bad the problem is. Others simply plan to work forever. When it comes to our savings habits (or lack thereof), the statistics speak for themselves.
- 88% of Americans are worried about being able maintain a comfortable standard of living in retirement, and for good reason. This is nearly nine out of every 10 people, and really puts the gravity of the “retirement crisis” into perspective.
- According to the Social Security Administration (SSA), 34% of American workers have no savings set aside specifically for retirement.
- 46% of all American workers have less than $10,000 saved for retirement.
- American workers are $6.6 trillion short of what they need to retire comfortably, according to a study by Boston College’s Center for Retirement Research.There are about 165 million workers covered by Social Security, so this implies a savings shortfall of about $40,000 per worker.
- 40% of Baby Boomers plan to “work until they drop,” according to an AARP survey.
- However, 50% of 2015 retirees say they left the workforce earlier than they planned, for reasons such as health problems (60%), downsizing/closure of company (27%), caring for a spouse/family member (22%). Only 31% of early retirees said they retired early because they could afford it.
Social Security isn’t enough — and could become even less
Social Security is running out of money — fast. The system is projected to pay out about $77 billion more than it bring in per year through 2018, and the deficit will get even bigger after that.
Despite how many Americans view Social Security, it isn’t meant to be a standalone retirement system. Rather, it should simply bridge the gap between income from retirement savings and your cost of living. Unfortunately, too many Americans are reliant on their monthly checks.
The average monthly Social Security benefit is $1,335 per month, as of June 2015.
Social Security makes up at least half of all income for 65% of retirees.
And, SS income makes up more than 90% of income for 36% of retirees.
The latest Social Security Trustees’ report forecasts that the trust funds will run out of money by 2034, at which point the system will only support three-fourths of promised benefits.