Guest
The greatest retirement crisis in U.S. history has already begun, and official agencies are warning about the looming catastrophe that is about to hit older Americans. Without enough savings or assets, 80% of households with older adults are at risk of falling into economic insecurity as they age. But don’t be mistaken -- the impact on younger generations will be just as disastrous, they say. With seniors staying longer in the workforce to be able to make ends meet, younger workers are losing precious opportunities to advance their careers and start saving for retirement, too. A new analysis by Fidelity Investments exposes that this snowballing crisis is going to lower everyone’s standard of living over the next few years and continue to widen the inequality gap that is leaving each generation a little poorer than the one before. According to Ronald P. O'Hanley, the firm’s president of asset management and corporate services, millions of older Americans are now headed for destitute financial futures and old ages spent in poverty. “I'm not sure what would be worse,“ he continued, “millions of elderly unable to house and feed themselves, or the intergenerational strife that surely would erupt if young people are forced to lower their standard of living to pay for our failure to act in a timely manner to avert this crisis.“ Fidelity data shows that today, 40% of retiree households do not have sufficient income to cover their monthly expenses, O'Hanley said. “Well over half of all Americans have less than $25,000 in total savings, not counting the value of their primary residence or pension plans. And 28 percent have put aside less than $1,000.“ A recent survey from the American Advisors Group detailed that 47% of seniors rated the conditions of their retirement savings as poor and 44% said they had not saved enough to retire comfortably. At the same time, 62% of adult children are worried that the cost of living crisis is impacting their parent's retirement savings, with many (35%) worried they'll have to help their senior parents financially. Amid this anxiety over whether their parents will have enough retirement savings, a growing number of adults are planning about using their parents' home equity as a financial solution, the survey said. However, only 18% of those 62 and older would benefit from using their home equity to pay for long-term care and other expenses, should the need arise. The remaining 82% may actually not have enough home equity to cover these costs due to the ongoing correction in housing prices and the economic recession that is upon us. For that very reason, about a third of Americans over traditional retirement age, between 65 and 74, are expected to be still working in 2030. The increase in older workers staying on their jobs is causing concerns amongst business owners, too because employers have been expecting their expensive older workers to retire which would open senior-level jobs for younger workers looking to advance their careers. In other words, the current retirement crisis is reaching such alarming proportions that other generations are missing key opportunities to become financially independent, debt-free, and able to build wealth to afford their own retirements when the time arrives. This is going to create major distortions in our economy and continue to impoverish younger Americans, who may never enjoy the same standard of living their parents and grandparents once had. At the end of the day, this crisis is going to impact each and every one of us as it erodes our quality of life and delays our collective growth.
