The Retirement Truths Americans Can’t Ignore

A pile of burning money

Is the government burning through too much money? | NRCC

Social Security isn’t the only thing to worry about in retirement.

When was the last time you felt stress-free? How long has it been since you got through a day without worrying about money?

The 2016 election was divisive, but anxiety about retirement reaches across party lines. The National Institute on Retirement conducted a study revealing two facts that supersede political divides. First, Americans fear their retirement security is in jeopardy. Second, they feel no reassurance that the government will get to work addressing the nation’s retirement crisis anytime soon.

With most Americans behind on retirement savings, it’s no surprise they feel scared about their future. Let’s take a closer look at why Americans are worried about their retirement funds. Will the government do anything to fix No. 5?

Where’s America headed?

  • Millions more Americans could be headed toward poverty in retirement.

If current trends continue, retirees could face rates of poverty not seen since the Great Depression. Of the 18 million people employed in 2012 between ages 55 and 64, more than 4 million will be near poor or poor by age 65, according to the National Institute on Retirement study. Furthermore, by 2035 about 20 million retirees could be in poverty, rising to 25 million by 2050.

Next: More and more retirees are at risk because of this problem.

13. More people are carrying significant debt into retirement

Broken piggy bank with coins & hammer

Retirement projections don’t look good for Americans. |

  • The National Institute on Retirement study found 88% of Americans believe there’s a retirement crisis.

Although political polarization exists for a vast number of issues, Americans can agree on one thing: Economic conditions are affecting their ability to achieve a secure retirement. About 78% of Democrats and 76% of Republicans said so, according to the National Institute on Retirement study. And 88% of Americans would go further to claim the nation faces a retirement crisis.

If the goal is to live out your later years on the golf course, you must control your debt. However, the number of retirees with student-loan debt recently quadrupled, with people older than 60 carrying about $66.7 billion in student loans. Also, the inconsistencies of the stock market and unemployment continue to affect savings.

Next: Everyone over 40 years old should be concerned about this next problem.

12. Washington is not prioritizing retirement issues


Both parties agree Washington must take action on retirement. | Chip Somodevilla/Getty Images

  • 86% of Americans say leaders need to do a better job on retirement issues.

At this point, who isn’t frustrated? Even though Pew Research Center data showed the economy as the top voter concern in the 2016 election, 86% of Americans still say leaders in Washington need to give retirement a higher priority, according to the National Institute on Retirement study.

Next: What does the future hold for Social Security?

11. Future generations will not likely benefit from Social Security

millennial takes selfie wearing funny glasses

Millennials need to save for retirement, too. |

  • 82% of millennials are worried about not having enough money in retirement.

A retirement crisis worries not only Democrats (92%) and Republicans (88%), but also 82% of millennials. The likelihood millennials even see Social Security is slim, so it’s best to take matters into your own hands and max out your 401(k) contributions when you can. Investopedia says millennials should start saving anywhere from 4% to 18% of their pre-tax income in order to successfully retire at 67.


Next: Americans just want to be able to pay the bills.

10. The average mortgage debt for retirees has increased 82%

woman hand putting coin into piggy bank

A woman saves for retirement. |

  • The average mortgage debt for seniors today is $79,000.

The Consumer Financial Protection Bureau reports overall debt threatens the security of older Americans now more than ever. According to the bureau’s study, “In general, older consumers are carrying more debt, including mortgage, credit card, and even student loan debt, into their retirement years.”

According to data from the National Reverse Mortgage Lenders Association, U.S. homeowners ages 62 and older have more than $6 trillion in equity, an increase of $164.9 billion from the last quarter of 2015. And the average mortgage debt for seniors today increased 82% to $79,000, according to the Consumer Financial Protection Bureau. Therefore, it’s not surprising Americans are worried about their retirement security.

Next: What 401(k)?

9. People are not diversifying their portfolios

Wall Street sign

Americans are worried their 401(k) plans are lacking. | Stan Honda/AFP/Getty Images

  • 71% of Americans say pensions do more than 401(k)s to achieve a secure retirement.

With all this worry, you’d think Americans would place a higher importance on diversifying their portfolios with 401(k)s. However, individual 401(k) plans have become a pension replacement rather than supplement for most private-sector workers.

According to the National Institute on Retirement, about 71% of Americans say pensions do more to help workers achieve a secure retirement compared to 401(k) plans. And 65% say pensions are safer than 401(k) plans because professionals manage the risks.

Next: They don’t know enough.

8. Education on retirement options and issues is seriously lacking

Dumb and Dumber still

Are we smart enough to save for retirement, or are we Dumb and Dumber? | New Line Cinema

  • 87% say retirees don’t know enough about investments.

The National Institute on Retirement study reports 87% of Americans say retirees don’t know enough about managing investments. Originally, 401(k) plans were intended as supplemental support for pensions. But today, most people rely solely on this DIY account.

What’s the difference between the two options? Defined-benefit plans, such as pensions, guarantee a given amount of monthly income in retirement, minimizing worker risk. Defined-contribution plans, such as 401(k)s, allow employees to choose their own retirement investments with no guaranteed benefits, taking any risk off the employer.

Unfortunately many Americans regret their decisions to put so much weight into 401(k) accounts after seeing how economic downturns could wipe away any guarantee for an adequate retirement.

Next: Health is an issue.

7. Increasing cost of long-term care is rapidly draining people’s savingss

money illustration

Low wages are part of the retirement crisis. |

  • 83% struggle with salaries not keeping up with the rising costs of living.

Americans say the rising cost of long-term health care and low wages are major factors that make saving for retirement more difficult. Democrats and Republicans share concerns that middle-class wages aren’t keeping up with the cost of living.

On one hand, modern medicine allows for a greater life expectancy. On the other hand, it means paying more for long-term care. Americans should expect to pay about $6,844 a month for a semi-private room at the nursing home. A private room would cost $7,698 a month.

Making matters worse, 83% of Americans take issue with annual salaries not keeping up with the rising costs of living, according to the National Institute on Retirement. Pew Research Center says, according to the Bureau of Labor Statistics, the average hourly wage for nonmanagement private-sector workers in 2014 was $20.67. But when considering inflation, that average hourly wage has the same purchasing power it did in 1979.

Next: People want help from employers.

6. Employers are doing less to help employees with retirement savings

Wolf of Wall Street still

People want more from their employers. | Paramount Pictures

  • 74% feel employers aren’t contributing enough for workers’ retirement.

If you’re waiting on your company to pick up a piece of your retirement bill, stop. Fifty-seven million Americans work for small businesses with no access to a retirement savings plan through their employers.

An idea that goes beyond political affiliations is the overwhelming feeling — 74%, according to the National Institute on Retirement — that employers aren’t contributing enough for workers to have a secure retirement. And more than three-quarters of Americans agree the average worker cannot save enough for retirement on his or her own.

Next: Americans don’t want to see any more cuts.

5. Social Security funds are dwindling

woman helping senior woman

A woman helps a senior plan for retirement. |

  • 84% of Democrats and 69% of Republicans disagree with reducing Social Security for current retirees.

Even at their children’s expense, Americans still overwhelmingly oppose cuts to Social Security for current and future retirees. According to the National Institute on Retirement report, almost 22% of people age 65 and older depend on Social Security benefits for 90% or more of their income.

But Social Security cuts verses spending is still a politically divided topic. When it comes to reducing Social Security benefits for current retirees, 84% of Democrats and 69% of Republicans disagree. And 86% of Democrats and 63% of Republicans disagree with reducing Social Security benefits for future retirees.

Next: People would consider participating in state retirement plans.

4. State retirement plans could help

"retirement ahead" sign

Most Americans would participate in state retirement plans. |

  • 81% say they would participate in a state retirement plan.

The National Institute on Retirement report found most people are in favor of any process that makes saving money more attainable. According to the survey, 81% say they would consider participating in state retirement plans. And more than 30 states have considered Secure Choice legislation. That would provide an easier option of payroll deductions for retirement savings without employers having to offer a retirement plan.

Next: Most people favor pensions.

3. Easier access to public pensions could also help

Two senior men holding several stacks of money

Only a quarter of public pension costs comes from taxpayers. |

  • 82% think it should be easier to get a pension.

Taxpayers pay 25% or less of public pension costs, according to the National Institute on Retirement report. Most pension funds actually come from employee contributions and investment returns.

Maybe it’s due to unfamiliarity with managing finances, but most people favor the monthly stability a pension offers rather than the sensitivity of a 401(k) in a volatile market. Eighty-two percent of people surveyed think Washington should make it easier for employers to offer pensions.

Next: People like public-employee benefits.

2. Many people value better public-employee retirement benefits

Washington, D.C. police cruisers

Americans support public-employee pensions. | Karen Bleier/Getty Images

  • 52% think pensions for public employees are on target.

The National Institute on Retirement study indicates Americans support public-employee pensions because some public employees have high-risk jobs or low pay. Fifty-two percent of Americans think public pension levels for teachers, police, firefighters, and first responders are right on target — at about $2,205 per month. They also believe pensions help to recruit and retain skilled workers.

Next: Women should worry.

1. Women should worry most

Smiling happy young woman giving her friend a lift in her car

In retirement, women fare worse than men. |

  • Women are 80% more likely than men to live in poverty after they turn 65.

U.S. women will live about 6.7 years longer than men. But having all that extra time to check things off your bucket list means nothing if you have no money to do so. The National Institute on Retirement study states women are 80% more likely than men to be in poverty at age 65 and older. And women ages 75 to 79 were three times more likely to be in poverty.


Next: What can you do?

Secure your retirement

Happy senior couple standing on beach with arms outstretched

You could still have a carefree retirement. |

Of course there’s no sure thing, especially when it comes to finances. But there are steps you can take to protect and grow your retirement fund. First, start saving as early as you can and become as financially literate as possible. Know when to take Social Security to maximize your benefits. Consider relocating to a more affordable state. And learn from other people’s mistakes.

Follow Lauren on Twitter @la_hamer.

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