Retirement crisis ahead for boomers and Gen Xers

With most workers having less than $25,000 in total savings, Americans are headed for a dismal old age. And many 'have their heads in the sand.'

By Aimee Picchi Mar 19, 2013 1:03PM

Close-up of a Banking Services Pamphlet © Keith Brofsky, Photodisc, Getty ImagesIt's often said that getting old isn't for sissies, but baby boomers and Gen Xers may find that's an understatement. 


Americans aren't saving enough to retire, with 57% of U.S. workers reporting less than $25,000 in total household savings and investments, excluding their homes, according to a new report from the Employee Benefit Research Institute


Even worse, the study found fewer workers are actually putting money aside for retirement, with only 57% saying they're currently saving, down from 65% in 2009, the study found. 


It's not something that workers are unconcerned about, however, as 28% said they have no confidence they'll be able to retire comfortably, up from 23% just last year. 


"With baby boomers and Gen Xers, 44% of them will run short of money in retirement," Jack VanDerhei, the research director at EBRI, told MSN Money. "Forty-one percent of people in the lowest income quartile will run short of money within the first decade of retirement."


Workers between 25 and 34 years old are actually saving the least, with only 56% of them saying they have set aside money. As my colleague Kim Peterson wrote on Monday, younger people are also struggling to save money to buy houses or make other investments.


Those are bleak findings, but VanDerhei said something else in this year's study surprised him even more. 


After conducting the survey for 23 years, EBRI this year asked workers whether they know how much they should be setting aside, VanDerhei said, noting that a common assumption is that workers don't know the basics of retirement funding. 


He says he was shocked to find that workers actually know they should be putting aside as much as 20% of their income, in some cases. So why aren't Americans stashing more for their old age? 


Immediate financial demands are among the reasons -- paying down debt and rising cost-of-living expenses. But some wishful thinking is also going on. "There is still a significant percentage who have their head in the sand and don't want to pay attention because they don't want to be unsettled," VanDerhei noted. 


Workers "get the fact they aren't saving as much as they should. That's not translating into increased savings. It's translating into, 'I'll just push back my retirement age,'" VanDerhei added. 


That's a dangerous plan, he cautioned, because nearly half of retirees say they stopped working sooner than they had planned, most often due to problems such as poor health or a disability. 


"It's a risky proposition to defer the pain until a later date," VanDerhei noted. 


What about retiring on Social Security? Sure, if you're looking forward to scrimping and enjoying a low quality of life in your old age. "Based on any type of minimum expenditures needed to keep a decent standard of living," VanDerhei said, "Social Security will not be enough."


More on moneyNOW

VIDEO ON MSN MONEY

532Comments
Mar 19, 2013 1:46PM
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It all comes down to choices.  Saving for retirement is a choice.  Paying for TV or a data plan is a choice.  Living in a big house or driving an expensive car is a choice.  Having children out of wedlock or racking up debt is a choice.  We live in a free country - you are free to make your own choices.  However, if you make bad decisions, you should be prepared to live with the consequences.  Don't expect other people, who made better choices, to bail you out.
Mar 19, 2013 3:07PM
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Poor decisions are killing the average americans finances. I see people who make much less than me with the latest smart phone, flat screen TV's, expensive cars, and elaborate vacations. They look down their nose at my flip phone, and 5 year old car. I read this article and now know how they fund that stuff. I have paid off my home and have plenty for retirement. I buy new cars and finance them for 24 months. If Americans keep buying this junk and blowing all their cash, they better enjoy the taste of alpo.

Mar 19, 2013 2:27PM
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Nothing will get fixed till our politicians stop taking care of personal financial family dynasties and start to figure out how or are forced to bring the good manufacturing jobs back to America. 
Mar 19, 2013 1:43PM
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The writer has his head in the sand. When boom went to bust, cashing in my 401K was a necessity after loosing my job. I did everything right  and the banks won. At least my credit score is still intact at 800,  but means little as banks won't loan the $ anyway. The innocent suffer still as bankers continue to count the $ instead of going to jail for what they pulled!
Mar 19, 2013 2:16PM
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I understand that people spend crazy, but honestly how many 23yos have a nickel left over after the end of the week.  and it is not a chioce of paying yourself first and then living off the rest.  most young people I know can barely get by!  they are not focusing on retireemnt...they are focused on survival!

 

 

Mar 19, 2013 3:08PM
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Retirement savings? I might have some if the state & federal government would stop grabbing my wallet
Mar 19, 2013 1:33PM
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Not hard to believe people have their heads buried in the sand, they voted for Obama
Mar 19, 2013 2:36PM
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We live in a society where more and more people believe it is governments job to take care of its citizens. Look at all the social programs today as compared to just after World War II. There is a reason why our government has chalked up almost $17 Trillion in national debt. When almost 50% of the population is on some type of government assistance program, that section of the population is in no means to save money for retirement. That leaves 50% of the population, many of which, live paycheck to paycheck simply to make ends meet. The high cost of gasoline, food costs skyrocketing etc...mean less disposable income available for saving. Tell us all something we don't know.
Mar 19, 2013 2:27PM
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Retired after a divorce, the auto industry collapse, which was not saved, but got a new beginning, thanks to Obama. I retired to Costa Rica, no heat, no A/C, no jacket, no problem. I live very well on a small pension that's a joke, plus a modest savings for emergencies. and Social Security. The government did  not bail me me out on my collapsed investments, not being a bank. however I do draw a decent ( for Central America) check from S.S. I'll never get back with interest what I paid in, unless I live to be 99 1/2.  If you cancel part B Medicare you can use that portion for coverage outside the U.S. and save at least part of your income from the government.  Moving back to the U.S. ? Never.
Mar 19, 2013 2:39PM
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AS YOU SAVE FOR RETIREMENT, THE MORE U SAVE , THE MORE THEY WILL TAKE AWAY. THIS IS THE NEW AMERICA--STAY HEALTHY
Mar 19, 2013 2:44PM
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I do not plan on getting anything from Social Security when I retire in 18 years.  By then the system will be out of money and cuts in benefits will be required.  Funny how the government can think of ways to benefits and services on those of us who contribute to the system but they can't agree to cut government waste.  It is both Democrats and Republicans.  Yet they never cut their benefits.

 

My wife and I have just started saving for retirement.  We have made a plan as to how much we need to save, assuming a modest 5% annual return on investments.  Hopefully we will experience great returns then 5%.  We are very determined to make the spending and life style cuts needed to achieve our goal. 

 

Here is to the good life of doing the things we all dream of doing.

Mar 19, 2013 2:58PM
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Wealth is like manure, doesn't do much good if not spread around.

The top 20% of the populace controls 89% of the wealth. Of that amount, the top 0.01% control 37%. The bottom 80% only control 11%. This shift of wealth to the elite has decimated the middle class.

It's no wonder the congress is hesitant to tax the top 2%, since individually they are in this group. Our constitutional republic has evolved into a plutocracy thanks to over four decades of poor governance due to greed and corruption by our elected reps.

In answer to the question, a balance of power.
Mar 19, 2013 1:35PM
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Any one who though Social  Security was a viable retirement plan was very dumb.The money spent on trash ,Cable  TV , cell phones for drivel ,junk food ,lousy movies would be far better saved .Talk of individual freedom is nonsense if people are induced to be profligate.
Mar 19, 2013 3:56PM
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Part of the problem is the clear lack of responsible saving by those in our society. We've become a nation of reality tv watchers (what a waste of time!), going out to eat all the time, and have to have the largest wall-mounted tv there is and the lastest electronic gadget (IPad Mini, smart phone, etc.). People choose to buy that stuff instead of saving for retirement.  We have a regular tv, a cell only for emergency use when driving, Dell desktop computer for internet use, own our own home, and are retired, and doing just fine. Not a whole lot of sympathy for those who spend it as soon as they get it.  But, I do feel very badly for those who have found themselved in financial trouble through no fault of their own, such loosing their job in this really bad economy.
Mar 19, 2013 2:37PM
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The financial community needs to stop crying the ceiling is falling.  They just continue to scare people.  Especially when they try and say you need to be saving a certain % of your pay or need millions.  Most people cannot relate to that analysis.

 

Instead they should be telling people to save whatever they can so at least people will start.  Once they start, they tend to increase it over time.  But if they never start, they tend to feel like it is a hopeless case.

 

And then factor in student loans which are crippling people.  The government needs to stop offering loans to these online schools that charge a ridiculous rate per class.  And then people do not graduate on top of it.

 

The government should be offering loans only to community colleges.  Lower cost and potential risk for everyone involved.

Mar 19, 2013 3:01PM
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How can anybody save with the rising cost of living and no pay increases. Who's the one that's has their head in the sand? Not me. I'm planning on working until I can't no more then move in with a relative because one won't be able to live on SS alone.
Mar 19, 2013 2:07PM
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yes it is correct most people including myself are not saving, due to yes you are correct agian normal living exspenses normal family life buying children clothes, driving them to soccer, baskball, bowling, out with friends and just trying to keep your home looking cared for, paint, roof, grass, and you all know the other side of daily living expenses Electric, Gas, Phone, Water, along with insurance then throw in the car. truck fuel, insurance, taxes, plates, registration and upkeep, you quickly realize another year has gone by and the retirement issue never gets dealt with kinda like the Post Office trying to stop Saturday Mail delievery, simple in idea just hard to do.
Mar 19, 2013 2:49PM
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Who ever said retirement was a option.  Most of us who have saved still can't see there way clear to retirement.  The joke is why do I put anything away for retirement since I never wiil be able to afford to retire. 

Mar 19, 2013 1:45PM
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"Workers between 25 and 34 years old are actually saving the least, with only 56% of them saying they have set aside money." 

 

The GenX generation is those that were born roughly between 1961 and 1980. Some would argue as late as 1982.  If you do the math, this statement really is not representative and leads the reader astray.  A better comparison would ages 30-39.

Mar 19, 2013 4:47PM
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I'm going off grid on 80 acres and plans to build a humble 600 sq ft cabin.  I'll grow my own food.  And, I'll spend time with my best friends, my border collies, throwing frisbees and drink Titos Vodka and strong beer ..... then fart around ....what more can a man ask for?  I've discovered, as many of you, materialism is over-rated. 

I'll have a sign up at the gate:

I DONT DIAL 911

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