Getting Older, Broker, and Unprepared for Retirement...

Many older Americans are simply unprepared for the costs associated with retirement.

America is graying out. The massive cohort of baby boomers are now entering retirement age at a rate of close to 10,000 per day, or roughly 300,000 per month. Many are fully unprepared for the challenges associated with retiring and living a life where work income becomes a smaller source of support. The workforce during the last decade has added many lower wage jobs and this has added to the challenges of adequately saving for retirement. Saving takes work, patience, and enough disposable income to stash away. The facts are simply disturbing here. Most Americans entering retirement will rely on Social Security as their primary source of income. Since Social Security payouts come from current workers, those young lower paid workers are going to face a growing burden. This is all documented yet many Americans are entering old age fully unprepared for the economic challenges they will face. Healthcare costs are soaring but so are food costs, energy prices, and housing costs and all of these will be eaten away if your fixed income does not keep up.

The graying out of America

I’ve noticed over the last decade a larger number of older Americans working at what would be minimum wage jobs. Part of this is that the workforce is aging but also that many are simply unable to get by with their Social Security payouts. Social Security benefits are relatively little compared to the current cost of living. Also, Social Security was never intended to be the main source of retirement income when proposed. It was suppose to be a supplement to retirement savings, pensions, and then Social Security made up the final leg of a well rounded retirement plan. As you know, only about 10 percent of Americans now have access to a pension and only half of Americans own any stocks at all.

A larger portion of our population is hitting retirement age:

This trend is only going to continue. What is troubling is that most of the jobs added since the Great Recession ended come from the low wage employment sectors:

Source: NELP

“For example, 3.6 million higher-wage jobs were lost due to the recession and only 2.6 million jobs in this segment have been added back. We are in a net-deficit of good paying jobs by 1 million. On the other hand, we lost 2 million low-wage jobs during the recession but have added 3.8 million lower-wage jobs during the recovery. A net add of 1.8 million lower-wage jobs.”

This is troubling given that active workers support the growing number of people on Social Security payments. More of a burden is being placed on a population that is largely unable to support the growing needs of an aging cohort:

“For most people, they are going to have to wait until they hit 67 before they can draw full benefits. This is why it is becoming more common to see older workers at places like Target, Wal-Mart, or many other retail establishments. People need to supplement their benefits with other income. Not exactly the ideal notion of walking on the beach with Margaritas riding into the sunset.”

The stock market although reaching a peak this year, is not really reflecting what is going on with Main Street USA. You have to wonder what this is going to do in politics since younger voters have at times diverging interests and needs from older Americans. In the end, both groups need support and it would be better to understand that both young and old Americans have their own set of economic challenges. Young Americans are worried about college debt, low wage jobs, and access to affordable housing. Many older Americans are worried about rising healthcare costs, retirement savings, and being able to have enough asinflation causes prices to rise.

This is going to a big challenge for America. Many are getting older, poorer, and there is really no bailout to the passage of time. These challenges will arrive. Many are simply living day-to-day and paycheck-to-paycheck so the inevitable is likely to become reality.