Although some people choose to work forever, many would like to hang up their work hat and permanently leave the work force at some point. Not everyone is interested in working until they draw their last breath. If you’re one of them, we have some bad news for you. You might never be able to retire.
Here are eight brutally honest reasons why the middle class will never retire.
1. Americans aren’t saving enough
- 20% of Americans are not putting anything away for a rainy day.
You’ve heard it time and again, but we’re going to tell you again: Save your money. Having a cash cushion to fall back on is very important. The rug could be pulled out from under you at any moment, so it’s in your best interest to have a financial safety net. Unfortunately, 20% of Americans are not putting anything away for a rainy day, according to a recent Bankrate survey. Among respondents, 2 in 5 said they’re not saving because of high expenses, and 1 in 6 said they aren’t saving because they don’t have a good job.
Next: Good luck with that raise.
2. Raises are low—or non-existent
- Some employers are choosing to offer bonuses instead of raises.
A decent raise might not be in your future. Employers aren’t feeling too generous these days. Average hourly earnings rose just 2.6% in April, a slight dip from March, reports CNBC. Some employers are doing away with raises altogether. Instead of an annual cost-of-living increase, some employers are choosing to offer bonuses. A report released by Aon Hewitt notes this shift is a result of pressure to increase productivity and reduce costs.
Next: Don’t get sick.
3. Healthcare costs are rising
- The average annual cost for health care for those 65 and older is $5,248.
The rising costs associated with healthcare don’t help matters much, either. It’s getting more expensive to stay well, and that’s keeping some Americans from saving as much as they could for retirement. According to the Bureau of Labor Statistics Consumer Expenditure Survey, the average annual cost for health care for those 65 and older is $5,248. Some of the most expensive costs associated with health care include health insurance (annual average of $3,592), medical services (annual average of $932), and medicine (annual average of $550).
Next: Housing costs are holding some people back.
4. Many are struggling with mortgage debt
- In 2011, 30% of those age 65 and older were carrying mortgage debt.
Some Americans still have mortgage debt lingering over their heads close to the time they hoped to retire and even during retirement. Older Americans who are close to retirement and still have a mortgage are struggling to save for their golden years. The Consumer Financial Protection Bureau reported the percentage of those age 65 and older carrying mortgage debt has risen from 22% in 2001 to 30% in 2011.
Next: Less employers are offering this.
5. Fewer employers are offering a 401(k)
- Just 14% of companies made 401(k) plans available to their employees in 2012,
Although financial experts emphasize the importance of having a 401(k), fewer employers are offering them. However, those who do have a 401(k) are not putting all that much into their accounts. Just 14% of companies made 401(k) plans available to their employees in 2012, according to 2017 U.S. Census Bureau research. Among that group, only about a third of workers contributed to their plans.
Next: A tough choice
6. More workers are taking care of aging parents
- There are roughly 40.4 million unpaid caregivers of adults ages 65 and older in the U.S.
As parents get older, they tend to need more physical and financial help. Consequently, American workers are sandwiched between providing financial support to their children and aging parents. This could significantly impact one’s ability to save for retirement. There are roughly 40.4 million unpaid caregivers of adults ages 65 and older in the U.S. Among that group, 9 out of 10 are taking care of an aging relative, according to Pew Research Center.
Next: Together forever?
7. Adult children are reluctant to leave the nest
- 58% of parents said they provided financial help to their adult children.
Another reason retirement is becoming tougher is because adult children are either returning home or reluctant to leave at all. In 2014, adults between the ages of 18 and 34 were more likely to be living with their parents than with a spouse or partner or on their own, according to Pew Research. This arrangement could add significant financial stress. In addition, roughly 39% of parents surveyed in another Pew Research poll said they helped their adult children with errands, housework, and home repairs. Furthermore, 58% said they provided financial help to their adult children.
Next: A debt that never seems to go away.
8. Student loan debt is still a problem
- Older workers who have been paying down student loan debt over the last five years have saved $182,000 less for retirement.
You might think only younger people are struggling with student loan debt, but that’s not the case. The number of people age 60 and older who have student loan debt has quadrupled over the last decade, according to the Consumer Financial Protection Bureau. That’s because some parents and grandparents take out loans to assist their children and grandchildren with college tuition. Older workers who have been paying down student loan debt over the last five years have saved $182,000 less for retirement, according to AARP’s 2017 Financial Innovation Frontiers study.
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