If you’re in your late 20’s or early 30’s and you haven’t seriously planned how to save for your retirement, you might want to forgo the latest cell phone or Apple gizmo. You’re probably going to need that money, and a lot more of it.
For the first time since the 1940’s, a majority of Americans will be financially worse off in their elderly years than their parents, according to a recent article in the Washington Post. The nation’s retirement savings deficit is rapidly approaching $7 trillion, according to data from the US Senate.
The Post article cites a new report by the Center for Retirement Research that mirrors similar findings at the New School for Social Research and the Heritage Foundation.
The news is particularly grim considering the troubled state of the US economy and the difficulty both Democrats and Republicans are having solving the problem. The temptation to blame US workers for not saving enough is hard to resist for some political leaders, but that doesn’t reflect the facts.
Many aging Americans did plan for retirement, but the Great Recession wiped out 40 percent of Americans’ personal wealth. And many have found themselves unemployed for long periods of time, which required spending much or all of what they saved for retirement.
But the situation doesn’t bode well for younger workers, either. More than 50 percent of workers 30 and older aren’t planning for a time when they won’t be full-time earners.
“Problems for future retirees seem to be closing in from all sides,” according to the Post. Half of American workers have no retirement plans through their jobs, and those that do are not contributing enough to their plans.
And politicians who favor austerity strategies to reduce the long-term debt have their eyes focused on federal programs like Medicare and Medicaid for cuts. Those reductions are typically proposed to kick in 10 to 20 years from now, greatly impacting today’s younger workers.