How Does the Broke Middle Class Really Afford Retirement?

The middle class isn’t poor, but they’re certainly not rich. Turns out, this generation is broker than ever — and many of them are struggling to retire at a reasonable age, let alone at all.

These are six tricks and tools the middle class uses to afford retirement, but they often  come at a cost. We’ll also let you know how much you really should have saved for retirement (page 7).

1. Social Security

It’s hard to make ends meet on Social Security alone. | William Thomas Cain/Getty Images

Social Security checks — often dubbed “welfare for the middle class” — provide monthly stipends to retirees based on their working income. According to The Washington Post, Social Security benefits have lost nearly a third of their purchasing power in the last 18 years.

Almost 20% of retired adults 65 and older rely on Social Security as their sole form of income. Thirty-three percent use it as the majority (90%) of their income, while a staggering 60% rely on it as half their income. The average monthly Social Security benefit for 2017 was $1,342.

Next: Here’s how retirees are paying for healthcare.

2. Medicare

couple on consultation with a doctor

Medicare is a huge help, but it isn’t always enough. | Didesign021/iStock/Getty Images

Many middle-class adults 65 and older rely on Medicare to cover expensive but common medical services. Medicare will take care of prescription drug purchases, organ transplants, and lab tests. However, it won’t take care of basic vision, hearing, and dental check-ups.

Medicare Part B — which covers the costs of doctor visits and outpatient services — is going to be pricier in 2018 for Americans collecting Social Security checks. Since Social Security automatically pays the Part B premium, Americans were paying around $109 a month for Medicare coverage in 2017. In 2018, around 28$ of Part B enrollees’ Social Security cost-of-living adjustment (COLA) increase won’t be enough to cover the premium.

Next: This program covers 20% of Americans nationwide.

3. Medicaid

Nurse standing with old patient

Medicaid pays for the majority of seniors living in nursing homes. | Rawpixel/iStock/Getty Images

Medicaid — not Medicare — pays for most of nursing home or home care for the elderly when older adults run out of savings. According to CNN, Medicaid pays for around two-thirds of the 1.4 million elderly currently living in nursing homes. It also covers 20% of all Americans.

While the GOP’s 2017 battle to repeal Obamacare failed, it scared many middle-class Americans. The legislation would have taken an ax to Medicaid — leaving more people than before without government-subsidized insurance.

Next: You’ll be surprised how many people work after retiring from full-time positions.

4. Part-time jobs

Christmas work party

Some people stay working past retirement age. | Ulrik Tofte/iStock/Getty Images

In May 2016, 18.8% of Americans 65 and older still held a job.  As life-expectancy increases from decade to decade so does the need to save more — as well as the desire to continue giving back to our community. Plenty of Americans choose to continue working for more than just the money. Since you can work and still receive Social Security benefits — although your job earnings may impact how much you receive — many Americans choose to seek the best of both worlds come 65.

Many retirees work seasonal part-time jobs, choose to profit from their hobbies or work in the “gig economy” driving for Uber or Lyft.

Next: Depending on your assets, this may be the way to go.

5. Mortgage-free by retirement

black couple standing outside a large suburban house

Retirees should be mortgage-free by the time they leave work. | monkeybusinessimages/iStock/Getty Images

Most financial planners recommend their clients pay off the mortgage on their house before they retire. The percentage of homeowners of retiring age with mortgage debt increased from 22% to 30% from 2001 to 2011. Homeowners 75 and older with debt skyrocketed from 8.4% to 21.2%.

However, there are still plenty of middle-class Americans finding ways to pay their mortgage off before they lose their regular income. Fifty-four percent of retired Americans were mortgage-free in 2017.

Next: We bet you never considered this career path after age 65.

6. ‘Workampers’

Some seniors travel the country working seasonal jobs. | Kevork Djansezian/Getty Images

A Washington Post story on the broke middle class revealed a new type of way older Americans are retiring: Buying campers and hitting the road to work as they travel. These “workampers” sell their homes, purchase RVs, and pick up seasonal jobs as they travel the country.

The paper highlighted Amazon’s “CamperForce” program, which “brings together a community of enthusiastic RV’ers who help make the holidays bright for customers of” The program has campsites in 27 states where retirees spend 3 to 4 of the winter months picking, packing, stowing, and receiving shipments. The program’s benefits include paid campsites, time and a half overtime, life and AD&D insurance as well as medical and prescription drug coverage.

Next: Did you know this is how much you should be saving?

Here’s how much retirement money you should have

concept of Planning for retirement

Start saving for retirement early. | jerry2313/iStock/Getty Images

An alarming 70% of American adults have less than $1,000 in their savings accounts. Experts have crunched the numbers to identify how much you should have saved at each age milestone for a comfortable retirement.

By age 30, aim to have the equivalent of your annual salary saved. Every five years, increase this in single increments: By 35, you should have twice your annual salary saved and by 40-years-old you should have three times. By 65-years-old this will leave you with a savings equivalent to eight times your annual salary.

Next: Despite their lack of savings, this is when the average member of the middle class retires.

The middle class is actually retiring earlier

retirees dancing

People are retiring early — whether they can afford it or not. | Rhona Wise/AFP/Getty Images)

One in 5 Americans has no savings account and nearly half retire with nothing in the bank. A 2015 U.S. Government Accountability Office report revealed that almost one-third of U.S. households “headed by someone 55 or older” are void of pensions and retirement savings.

About half of America retires by age 65, while 22% retire from 66- to 74-years-old. In 2000, the average age of retirement was 62. As of 2017, it’s 63 — still under the recommended age of 66.

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