By Claire Moraa
- Approximately 56 million private employees do not have access to retirement plans through their employers
- Slightly more than half of Americans aged 65 and older have incomes below $30,000 per year
Retirement is a dream many Americans hold dear, a time to relax, enjoy life, and reap the rewards of years of hard work. However, a dark cloud hangs over this dream as a retirement crisis looms. Many Americans are struggling to save enough for their golden years, and the situation is becoming increasingly dire. Just 44% of U.S. adults are able to afford an emergency expense of $1,000 or more from their savings. Further, the median retiree has a meager $142,500 in savings, while a shocking 25% haven’t saved anything at all.
Why This Matters: The struggle for many Americans to save for retirement is influenced by several factors. One notable reason is the lack of access to employer-sponsored retirement plans, such as 401(k)s. Furthermore, stagnant wages and the rising cost of living contribute to the challenge of saving for retirement. With many individuals facing high living expenses and limited income growth, it becomes increasingly difficult to afford unexpected expenses let alone set aside sufficient funds for retirement savings. This makes it more challenging to prioritize long-term savings over short-term financial needs.
For others, it is the lack of necessary knowledge or guidance to effectively manage their finances and allocate funds for retirement savings. In reality, 19% of retirees have already outlived their savings, forcing them to burn through their funds faster than anticipated. And while at face view it may seem like its the retirees’ problem, the retirement crisis has a ripple effect. As individuals struggle to support themselves in retirement, they often turn to public assistance programs, placing a substantial burden on taxpayers.
Situational Awareness: The statistics paint a picture that many Americans are not adequately prepared for retirement financially. For those already inching to their golden years, welfare programs may step in to ease the financial burden. For those who still have a long way to go, now is the time to build their retirement plans starting with financial literacy. The government should also play its part by empowering workers through favorable employment policies that enable people to save. It is important to save a demographic at a time while we still can before it becomes an unbearable burden.
