56 Million Americans Can't Afford To Retire As Cost Of Basic Items Soars Across The US

new studies show that 56 million U.S workers can't afford to retire in 2023 many do not have a single Dollar Save for their future let alone a retirement plan with the cost of Base sickness since it is going through the roof it's getting increasingly challenging for people to start putting money aside for their senior years the Reliance many groups have on Social Security benefits is rapidly depleting this important government fund and leaving Americans in an extremely precarious financial situation according to Pew research estimates U.S households will be forced to pay over 13 000 more in taxes every year to fund the retirements of our aging population this means that even younger Generations will feel the impact of this worsening crisis and many of us will have to lower our living standards to be able to make ends meet that's what we're going to expose today but before moving on WE kindly ask you to support our work with a thumbs up and don't forget to subscribe to our channel so you don't miss our upcoming videos unless a major course correction takes place before the end of the decade the majority of workers in the United States are set to face significant retirement hardship the growing number of economists researchers and official agencies a warning about a grim new reality Americans will face after they retire just a couple of months ago a new study released by The Pew charitable trust estimated that 56 million workers in the private sector can't afford to retire in 2023 these people don't have a retirement plan or significant savings to support themselves financially if they stop working today government programs including Social Security can only provide less than 25 percent of the amount they need to get by month by month for the vice president of consumer insights Italians life Al caddy Levine the nation may be facing more of a retirement catastrophe than a retirement challenge or even crisis most Americans are saving too little for their future right now generation x's and Millennials are feeling increasingly uncertain about their ability to retire at some point in their lives and looking back over the past 10 plus years who can blame them Levine says from Financial crises to politics to the pandemic we all have reason to wonder what else might be just around the corner the firm's new poll of some are a thousand middle class American households with incomes above seventy five thousand dollars or investable assets of a hundred and fifty thousand dollars or more points out that market volatility and recurring economic downturns are making planning for retirement extremely difficult for younger Generations who may be just as unprepared as many baby boomers reaching retirement age right now with so many risks especially as stock market swings wiped out 25 percent of 401k accounts in the past year many households are trading for a more secure financial future just to make ends meet month by month the Paul found that stock market losses and economic headwinds LED 46 percent of respondents to say that they have reduced or stopped saving for retirement without plans to increase their savings levels in the foreseeable future to make up for the disruption today almost half of Americans say that everyday expenses are rising so rapidly that they won't be able to afford big sickness and cities in the future and this is seen as one of the greatest risks to retirement success this percentage is up from 44 in 2022 and 38 in 2021 according to Alliance life troublingly about 40 percent of U.S workers admit their retirement strategy has been derailed and they aren't sure when or how they'll get it back on track other stats reveal that a remarkable 61 percent of Americans say they're more afraid of running out of money than they are of dying with many of them unsure about their real chances of ever achieving a successful financial future by the time they reach retirement age on top of that 41 say they don't have a financial plan for retirement and will just figure it out when they get there well 56 don't know where to start planning beyond having a basic retirement account like a 401k or IRA at the same time the looming insolvency of the Social Security's old age and survivors Insurance trust fund which funds about one quarter of the program's benefits is Gonna Leave many Americans who believe they would have access to the benefit when they got older at an extremely vulnerable financial situation the government fund is expected to run out of money in less than a decade and the program will be solely reliant on payroll taxes for funding the reason the fund is being depleted is that many baby boomers who contributed to Social Security as workers are now collecting those benefits they are also living longer than previous generations and there isn't enough Revenue coming in from the current Workforce to make up the difference in other words it's not just older workers without a big brokerage account balance who are in trouble fact that so many people don't have enough money to fund their basic spending is going to cost the government more than one trillion dollars when it has to step in to provide assistance especially when it collects less tax revenue from American workers a separate analysis by the Pew Research Center estimates that the federal government is going to incur costs of about 964 billion dollars between 2023 and 2040 due to insufficient retirement savings while States will spend an estimated 334 billion dollars their calculations exposed of this amounts to 1.3 trillion dollars in costs that governments and thus taxpayers will have to bear the numbers are pretty clear most people won't have significant income to live on given their current level of savings last year roughly 43 percent of households comprising people aged 65 and over had less than 75 000 in income which is the amount of income Pew reports indicates Financial vulnerability and by 2040 there's going to be a 45 increase in the number of those households meaning that 32.6 million more people are gonna have less than 75 000 coming in the gap between the resources retirees will have and the resources they need is substantial in 2022 the average shortfall was six thousand seven hundred forty dollars to make things even more complicated as our population ages there will be fewer workers relative to the number of seniors facing these shortfalls so a smaller number of people will need to cover these big costs in fact the analysis highlights that the age dependency ratio that's the ratio of households with people at least age 65 to those of working age is expected to grow by nearly 50 percent in the next two decades in 2020 there were 37 households aged 65 and older for every 100 working age households but that ratio is set to jump to 54 older households for every 100 working age households by 2040. consequently the additional spending needed on programs such as Social Security and Medicaid will fall on the shoulders of a smaller portion of the working age population Pew reports that the additional taxpayer liability due to inadequate retirement savings will climb to about 13 600 per household but with stacked and wages fewer middle class jobs and a rising cost of living many families won't be able to cover that added cost and they won't likely be able to fill the retirement income gap facing the Aging American Workforce so millions of households will be forced to reduce their standard of living in retirement as American workers age inadequate retirement savings will result in major reductions in retirement income and therefore the quality of life for many will erode the analysts wrote young Generations tend not to think that far ahead but the CEO of BlackRock Larry Fink notes that the rising costs of Housing and health care today will also limit their ability to start building their own retirement savings the billionaire businessman argues that the United States is experiencing a silent retirement crisis that doesn't make headlines or attract attention because it's not immediate Fink wrote It's not this year's or even next year's problem but it is a crisis and the longer we delay the conversation about it the larger the crisis grows he says that much of the problem is rooted in the combination of longer life expectancy and falling fertility rates in a letter sent to the international monetary fund think outlined that fertility rates have dropped to an all-time low of 1.7 births per woman in the United States it will result in a smaller working population and cause income to grow more slowly or even decline think stressed for its part the IMF says this problem has been building for decades and it can explode in less than seven years just like many developed Nations the United States has to deal with the repercussions of an aging population and a shrinking labor force with fewer people paying into pensions and other Retirement Systems it is increasingly difficult to ensure that older Americans have decent living standards in retirement then it's also a major concern of academics at Boston College's Center for Retirement Research millions of families will have to cut back on both luxuries and Necessities in order to survive in some cases retirees won't be able to enjoy some of the same things that made them happy in their working years they might have to go out for dinner less often for example or they may no longer be able to travel for other people the situation will get more dire researchers noted in order to survive retirees will have to sell valued assets like a family home or may have to skip meals and Skip medication just to get by middle income workers may become low-income retirees when they reach their senior years while low-income workers can fall below the poverty line another worrying aspect to this problem is the fact that more and more United States workers are simply losing confidence that they'll have enough means to get through retirement a survey conducted by Boston College's academics uncovered that only 18 percent of the survey respondents said they felt confident they'll be able to reach some level of retirement security that's a drop of 10 points from the 2022 survey when the ratio of confident workers was 28 percent in contrast the percentage of workers who said they felt not confident about how much money to withdraw from their retirement jumped to 36 percent up from the 2022 response rate of 28 the last time a decline in confidence of this magnitude occurred was in 2008 during the global financial crisis says Craig Copeland director of wealth benefits research at the institution this shows that the current economic climate in particular inflation is eroding the confidence that Americans had in their retirement preparations going into the pandemic half of the retirees said that their overall spending is higher than expected an increase over last year's one-third and the share of retirees who fill their retirement lifestyle is worse than they expected is rapidly growing we may not be seeing the worst of the retirement crisis just yet but it's clear that it is already here we should pay very close attention to the challenges baby boomers are facing today because a similar feat is waiting for us they were once the richest generation in America and now millions of them are becoming financially insecure and getting closer to poverty with a recession at our door our future looks uncertain and at this point we should start doing everything in our power to change the course of things before our living standards deteriorate even further thank you for watching

Channel: Epic Economist

Views: 46,854

Keywords: retirement crisis, retirement savings, retirement plan, us living standards, cost of living crisis, retirement savings crisis, social security benefits, 401k plan, financial crisis, stock market crash, economic recession, baby boomer retirement crisis, middle class crisis, retirement poverty, financial insecurity, household debt, health care costs, us life expectancy, retirement investing, us pension funds, retirement savings shortfall, epic econmist

Id: y49hNjyBwjU

Length: 15min 16sec (916 seconds)

Published: Thu Jun 08 2023