The financial outlook for aging baby boomers is pretty grim: while a majority of U.S. workers have set aside funds for retirement, research suggests they haven’t saved nearly enough, forcing reliance on Social Security despite the system’s impending insolvency.
Most Americans’ retirement piggy banks are “quite slim,” writes USA Today regarding the Employee Benefit Research Institute’s most recent survey on retirement confidence, forecasting the very real possibility of not-quite-golden years for many about to retire.
Not considering home equity or defined benefit plans, 57% of households surveyed by the EBRI reported less than $25,000 in savings and investments. Nearly three in ten (28%) say they have less than $1,000 saved.
“Americans are still planning for retirement, but, as one would expect, how they have saved for retirement depends very heavily on age and on preretirement income,” writes USA Today.
More than a quarter (27%) of those surveyed in Gallup’s annual Economy and Personal Finance poll in April said income from part-time work post-retirement will be a “major source” of retirement funds, among respondents earning less than $30,000 a year. Another 42% of respondents in that financial category said Social Security would be their major source of income in retirement.
In contrast, 65% of those making $75,000 or more a year told Gallup their retirement savings accounts would be their major source of retirement funds. Only 17% planned to rely on Social Security benefits.
The United States’ retirement system earned a ‘C’ rating from consulting firm Mercer, compared to the ‘A’ grade Denmark received and the Netherlands’ retirement system’s B+ rating, which features a near-universal pension system funded by employer contributions along with a fund similar to Social Security.
“The study showed plainly that many other countries are more willing than the United States to mandate unpleasant steps by workers and employers to fund a stable system,” says the article.
The United States Social Security trust fund is expected to become insolvent by 2033, the program’s trustees said last Friday in their annual report.
Read the full article at USA Today.
Written by Alyssa Gerace