A number of recent studies reveal an alarming pattern. In short, a retirement crisis is looming on the horizon.
The findings indicate a large number of baby boomers – those born between 1946 and 1964 – are not saving enough for retirement. And, if the projections are correct, almost half of the U.S. population will not be able to maintain their current standard of living during retirement.
Let’s review some of the important concerns relating to retirement. They are not only startling but also a sad commentary on the financial condition of the majority of Americans.
For starters, two fifths of the baby boomers plan to work until they die. Fifty-four percent of Americans do not have a retirement savings plan. And 36 percent do not contribute anything toward saving for the future.
Fewer than half of Americans have $10,000 or less saved for retirement.
Moreover, 28 percent have less than $1,000 in retirement accounts.
When asked why they are not able to save for retirement, two factors surfaced. Respondents pointed to the rising cost of living, especially for food. And they noted increased cost of healthcare – particularly prices of health insurance – had a major impact on their ability to set aside funds for retirement.
Unfortunately, many people do not understand the issues involved in providing for a secure retirement. Instead, they seem intent on ignoring them and hoping for the best. This does not bode well for the 75 million baby boomers who are either retiring or approaching retirement in the future.
The scenario could get ugly. Millions of people could live in poverty during their golden years. Many who are physically and mentally able will no doubt seek to return to work. Others hold on to their current jobs as long as possible.
One obvious conclusion from these studies is the clear lack of understanding of personal finance by the general populace. This underscores much of the research into financial literacy which has concluded that many Americans are financially illiterate.
We need to do a better job of providing training in economics and finance to all Americans. The earlier this takes place – preferably in elementary school – the better everyone will understand the basic concepts. And both individuals and the nation will benefit.
Wayne Curtis, Ph.D., is a former superintendent of Alabama banks and Troy University business school dean. He is retired from the board of directors of First United Security Bank. Email him at firstname.lastname@example.org.