Retirement Insecurity is Real & Very Scary

19 May Retirement Insecurity is Real & Very Scary

Retirement Insecurity is a very real, (and very scary) reality for most Americans.  Pensions haven’t been around for years, now YOU must fund your own retirement & 401K.  If you can’t save for your retirement, you must ask yourself, will you have to work until you’re 80? 

Covid 19 Amplified Retirement Worries

The COVID-19 pandemic has made Americans even more anxious about their retirement.  Many long for the days when pensions were the dominant retirement savings plan, according to a report from the National Institute on Retirement Security.  The Retirement Insecurity 2021 survey found 51% of respondents doubt their ability to achieve financial security when they stop working.  One-third of workers have delayed their retirement date or are thinking about it. While two-thirds of those respondents are looking at a later date than they had anticipated, thanks to the pandemic.

NIRS surveyed over 1,200 adults over age 25 in December for the report.  Respondents aren’t just worried about themselves. More than two-thirds say the country is facing a retirement crisis. 68% percent believe the average worker can’t save enough on their own to promise a financially secure retirement.  Many older Americans plan to delay retirement as they play catch-up because of financial losses during the pandemic. However, new research shows that working longer is not the solution to the problem as previously believed.

Working Longer isn’t the Answer

“Americans see the retirement writing on the wall. A large swath of Americans are concerned about their economic security in retirement and increasingly see retirement as elusive,” according to the report.  When faced with financial insecurity about retirement most employees just plan to delay retirement and work longer.  The study showed far less savings by working longer than previously thought. Finally, the drastic job loss experienced by older workers due to the COVID-19 crisis reveals the risk older workers face working longer is their plan.   Working until you are 80 is not a plan and frankly just doesn’t work.

Social Security – Don’t Count on it

Let’s now talk about the “elephant” in the room, Social Security.  Respondents overall agreed there is a Social Security crisis.  Moreover, politicians don’t understand how difficult it is to save adequately in today’s high-cost world.  Worse yet they are split on whether Social Security should be expanded to better support retirees.

The program itself is highly valued, with 79% of respondents saying protecting Social Security should be a priority, regardless of other budget issues. However, social security is in trouble, and government reports say that Social Security is only viable until 2035. Lastly, the age to receive benefits keeps getting pushed back.  If you are planning on social security as a major part of your retirement plan, please think again.

Pensions have all but disappeared

Respondents came together again regarding pensions. Roughly three-quarters of respondents have a positive view of pension plans, and between 77% and 81% believe they’re superior to 401(k) plans. Unfortunately, pension plans are basically extinct and aren’t coming back any time soon, if ever.

The problem with pension plans is that they are costly and eat significantly into corporate profits.  Don’t take me as an anti-corporate person, I am a believer in the free market.  However, when 401K accounts were introduced back in1978, of course, large companies were the biggest proponents.  They saw the chance to save millions of dollars that would have gone to pension plans.  When CEOs are making millions every year while the majority of their employees can’t save for retirement, there’s a problem.

The U.S. is facing a retirement savings crisis that likely is worsening thanks to the economic crisis caused by the pandemic. Except for wealthier Americans, the typical working American is not on track to maintain their standard of living in retirement.

Final Thoughts

The questions most people think about before retirement are “How much money will I need?” and “Am I saving enough?”   Today’s older workers will live longer and spend more time in retirement than workers in any previous generation.  

So, what is the answer?  I have the magic bullet…leave the employee mindset behind and become an entrepreneur.  Build an online business that generates passive income allowing you to save for retirement and retire on time, or early!

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