The boomer retirement crunch begins
With scarce employer benefits and recession-ravaged 401K's, retirement for many boomers is looking tight.
This post comes from Emily Brandon at U.S. News & World Report.
The oldest baby boomers have already turned 65, and the older population of the U.S. is beginning to swell. The age-65-and-older population grew 18% between 2000 and 2011 to 41.4 million senior citizens, according to a recent Administration on Aging report.
These numbers are expected to further balloon over the coming decade as baby boomers continue to reach traditional retirement age. Here's what retirement looks like for the typical person age 65 or older in the U.S.:
Most retirees have very modest incomes. The median income for people age 65 and older was $27,707 for males and $15,362 for females in 2011. The typical household headed by someone age 65 or older had a median income of $48,538. The median income increased by 2% between 2010 and 2011 after adjusting for inflation. Almost 3.6 million elderly people (8.7%) lived below the poverty level in 2011.
Reliance on Social Security
The most common source of retirement income is Social Security, and 86% of people age 65 and older receive monthly payments. Social Security is responsible for 90% or more of the income received by 36% of beneficiaries.
Only about half (52%) of retirees receive income from their assets. Even fewer retirees receive monthly payments from private (27%) or government (15%) pensions. "The boomers will be the first generation to overwhelmingly not receive some sort of guaranteed benefits from employers," says Ken Dychtwald, president of the consulting firm Age Wave and author of A New Purpose: Redefining Money, Family, Work, Retirement, and Success.
"We now live in a 401(k) world where people are responsible for our own savings, and baby boomers have not done a very good job. It's a generation that is going to struggle in old age in the absence of reliable anchors and support systems."
Continuing to work
A growing proportion of the older population is continuing to work during the traditional retirement years. Some 18.5% of Americans age 65 and older were in the labor force in 2012, according to the Bureau of Labor Statistics, including 24% of men and 14% of women. Young retirees between ages 65 and 69 are the most likely to be working.
"For a lot of people, they literally need to work. Work has also increasingly become connected with the sense of the meaning of life and the purpose of life," says Marcie Pitt-Catsouphes, director of the Sloan Center on Aging and Work at Boston College. "The same person might have reasons from each of those categories."
While many people fantasize about moving someplace sunnier or more interesting, most people retire where they spent the final years of their career. Between 2011 and 2012, only 3% percent of people age 65 and older moved, compared to 14% of people under 65.
Most older movers stayed in the same state (83%) and the same county (61%). Only 16% of people who traded spaces after age 65 relocated out of state or abroad. Most senior citizens (81%) also reside in metropolitan areas. "We find increasing percentages of people living in urban areas as age increases," says Amy Symens Smith, chief of the age and special populations branch at the Census Bureau.
Making it to Medicare
The older population is much more likely to have health insurance coverage than younger counterparts. Almost all Americans (93%) age 65 and older were covered by Medicare in 2011. And 86% of retirees also have supplementary coverage that fills in some of the gaps and cost-sharing requirements of traditional Medicare.
The average life expectancy for people turning age 65 is an additional 20.4 years for women and 17.8 years for men. Older women significantly outnumber retired men. There are 23.4 million women age 65 and older, compared to 17.9 million older men. "Today people reach 65 and they think they are going to live to 85 or 90 or 100," Dychtwald says. "More and more people are getting wind of the idea that living a long life is not a certainty, but a strong likelihood."
More from U.S. News & World Report:
- 12 important retirement planning deadlines
- 10 things everyone should know about Social Security
- Make these 50 smart money moves now
VIDEO ON MSN MONEY
It doesn't have to be scary.
Spend less than you make.
Drive paid off cars.
Women- stay out of the mall and don't jack up credit cards.
Guys - not too many guns, golf and strip clubs.
Don't buy into conventional wisdom and drown in mortgage debt and property taxes.
Then you don't have pay attention to scare tactic articles like this.
Works for me.
Well, maybe except the golf part.
when the filthy, thieving politicians are spending it faster than we can pay it in.
i was laid off from my company so NO wage income since mid 2010. i get soc and a VERY small pension(w/NO COLA) for a total income UNDER 30k/year right now..
House is paid for
Car is paid for
Kids grown & gone
NO credit card debt but do use them as PLANNED
I am making it, reasonably comfortably. Could I use another 1020k/year. Sure. Who couldn't?
I just need some peace and quiet, an occassional cigar, and a sip of bourbon.
I'll get by okay.
What is frightening is that Social Security, a safety net originally intended to be a supplement only and to eliminate County Poor Houses for the elderly, has become the major source of old age income for so many people!
My wife and I plan on being fully self-sufficient in our eventual retirement, and have spent the past 30+ years making those plans feasible.
Economies are Not built so that Everyone can have everything they want regardless of how you might plan. Just like the lottery was never built so that everyone will win. If they did, guess what the payout would be. That's the dirty little secret that folks never talk about.
I find it very disappointing that the government is not looking at ways to deal with the pending retirement issues. The only plans I hear coming from both the Democrats or Republicans is to reduce benefits and raise taxes. Oh and lets not forget reducing the yearly inflation adjustment and making us work longer. I fail to understand how they think taking more money away from me in the form of taxes or reducing my future benefits, is going to help me save more for my future retirement or live a better life in retirement.
The fact is we are in this retirement battle alone. Do not plan on the government helping you. Do not plan on your employer helping you. Save as much money as you can in a Roth IRA. Then be prepared to hide the money when the government decides you have too much and they come to take it away from you.
Baby boomers are the tip of the iceberg. The income and dividends from savings and investments decrease while everything else increases: food, fuel, taxes, utilities etc. Whatever the baby boomer generation is forced to endure and make due with now, the generations following will be be even worse off.
The company sponsored pensions that were administered by reasonably ethical business men and women being replaced with 401 K's which are administered by crooks and Wall Street manipulators is the second worst economic misstep by the governing body of this country. Globalization, free trade and the subsequent removal of good paying American manufacturing jobs would be the first.
People need to be able to say "NO" to their kids and to retailers.Of course, that would
cause a recession.
The one big problem for those of us 75 and older is having enough insurance(medical) to cover the very high cost of Hospital care, and our drugs. Property insurance, and property taxes continue to clim EVERY year, but most of us are not enjoying incomes to offset these costs.
I do worry about this younger generation that are not saving enough for old age. The town I live in has a population of about 30,000. It's a wonderful town to raise your children, but they are not building enough housing for those earning an average income. Some couples are buying new houses costing over $200,000, - $300,000. This leaves them very little to put away for a rainy day, and those days will come sooner or later. New vehicles here are selling like hot cakes, and these youngsters are buying them and taking 5-6 years to pay for them. That's not good planning on their part. Fortunately, we have taught our children(they are now in their fourties and fifties) and are careful not to take on too much debt. Most of them drive 5 year old cars, and live in nice houses that cost less than $200,000. And they are saving for retirement. Our country is in for a tough economical
period that is coming soon.
It is regettable that while the wealth class continues to grow their assets, the middle class will continue to decline into the poor class. Salaries have not kept up with inflation since 1999. There is no way that the median middle and lower middle class can afford to save for retirement anymore.
Housing developments are showing the future with the construction of "family compounds" as the only way families will be able to afford the median price of new homes. Only the combined efforts of multiple families / multigenerationals will be able to buy "the American dream" in the future.
Child labor will be pushed as even 2 income familes will soon not be sufficient to support an income to support a family anymore. As the majority of the US citizens declines into third world living standards while the wealthy hoard all the wealth... again.
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Some workers lose up to a quarter of their paychecks paying off old debt from credit cards, medical bills and student loans, as well as child support.