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Will There Be a Retirement Crisis in America?

Updated on December 18, 2017
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Chris describes and reviews books, music, merchandise, even laws as a result of personal experience.

To Retire or Not To Retire

Author: Stuart Miles
Author: Stuart Miles | Source

The Greatest Retirement Crisis In American History

The Greatest Retirement Crisis in American History. That was the title to a March, 2013 article by Forbes. According to the Employee Benefit Research Institute (RCS Fact Sheet #3), fifty-seven percent of American families have less than $25,000 in their retirement accounts, including twenty-eight percent who have less than $1,000. The author of the Forbes article cited above, Edward Siedle made the following prediction: "At some point, lack of savings, lack of employment possibilities and failing health will catch up with the overwhelming majority of the nation’s elders."

This information, and much more like it, is why there has been a retirement crisis predicted for the very near future. As Babyboomers, those born between 1946 and 1964, turn retirement age, they simply will not have enough money to maintain their standard of living, and in many cases, will not have enough to meet basic expenses says a report by the Center for Retirement Research at Boston College.

The State of Personal Savings by Americans Hoping to Retire Soon

The following chart contains some of the information on nationwide retirement which has led to a cry for action. It breaks down the U.S. citizens, ages 50-64, by income level and shows the average amount which has been put away by each person for retirement. The chart also includes the number of these soon-to-be-retirees in each income level.

Average Retirement Account Balances of People Ages 50-64 in the U.S. by Personal Annual Income as of November, 2010

Total Personal Income
All Retirement Accounts (Average)
Number of Americans age 50-64
More than $52,201

This chart has been adapted from a chart on the website of The Schwartz Center for Economic Policy Analysis.

Social Security Alone Won't Be Enough

If most of these people retire with this level of savings, it won’t be long before they have nothing but Social Security on which to live. Here are some different ways of understanding the data from the table.

  • 75% of individuals nearing retirement age in 2010 had less than $30,000 on hand.
  • 80% of working families have saved less than one times their annual salary, and nearly half of those have no retirement assets at all.

The New York Stock Exchange


The National Retirement Deficit is $6.8 Trillion to $14 Trillion

All of the previous data referred to individuals and families. On the national level an additional perspective is gained. We know about the federal deficit. But few have heard of the nationwide retirement savings deficit. According to The National Institute of Retirement Security, if home equity and other non retirement income is counted, there is a $6.8 trillion retirement deficit. If only retirement savings is counted, that figure rises to $14 trillion. These figures are in reference to American workers, ages 32-64 and represents the deficit between what they have and what they will need for retirement.

Personal Debt


Personal Debt Intensifies the Retirement Crisis

In 2007, fifty percent of people between 55 to 66 years of age were paying mortgages which averaged $140,000. That is three times more owed than for the same age group from 18 years earlier when only thirty-four percent were paying mortgages. (Source: Survey of Consumer finances/Board of Governors of the Federal Reserve System).

Between 2001 and 2006, people from age 50 to age 62 (as of 2004) took out $380 billion in home equity loans. Then the housing bubble burst, and many of these very people are now trying to retire.

Senator Tom Harkin, Democratic Senator, Iowa


Senator Tom Harkin: Legislation for a Government Solution to the Retirement Crisis

According to many sources, including the Democratic Senator from Iowa, Tom Harkin, Social Security will continue to pay out full benefits through 2033. After that, it will be able to pay out 75% of benefits. So clearly, it needs to be tended to. Here is legislation presented by Senator Harkin which is quoted verbatim. (The legislation in depth).

Earlier this year I introduced legislation that would increase Social Security benefits modestly while extending the life of the Social Security Trust Fund through the year 2049. My proposal does so by:

  • Boosting benefits for all Social Security beneficiaries by approximately $70 per month;
  • Changing the way the Social Security Administration calculates the Cost of Living Adjustments (COLA) to ensure that seniors are able to better keep up with rising costs;
  • Phasing out the current taxable cap of $113,700 so that payroll taxes apply fairly to every dollar of wages, ensuring that wealthy Americans and working Americans pay into the Social Security Trust fund at the same rate.

Senator Harkin also serves as Chairman, Senate HELP Committee & the Appropriations Subcommittee on Health, Education, Labor.

The Responsibility for Individual Retirement Rests on the Shoulders of Individual Americans

Washington seems to be focused on the federal deficit and the national debt, which present their own crises, but the retirement deficit is receiving little attention. The question that must be answered by those of us nearing retirement age, is whether this is a crisis to be solved by the government or by individuals and families. Here are a few suggestions that may help reduce the personal retirement deficit each of us is facing.

Reduce debt

  • Sell the home that will not be affordable in retirement.
  • Sell the vehicles purchased on credit and buy a less expensive one for cash.

Begin saving every dollar possible by cutting out excessive spending on restaurants, movies and expensive vacations.

Work longer into the future than planned. A few years ago, the average retirement age for men was 62. The new retirement age may be 70 for many workers.

Care for and Maintain your health. This seems like an obvious thing to do, but our financial future could be seriously affected by a serious illness.

Dave Ramsey on Retirement Saving.....2 minutes, 11 seconds

To Fail to Plan is to Plan to Fail

No matter what age we are, planning for retirement is absolutely essential. Do you have a strategy for your own retirement? If so, and if it is financially sound, then stick to it. If you don't, then keep in mind that to fail to plan is to plan to fail. But aggressive action, even if late, is better than inaction.


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    • Easy Exercise profile image

      Kelly A Burnett 

      7 years ago from United States


      And on top of the financial burden, we have a looming health burden that is even more frightening. If we don't address the health problem in a proactive empowerment manner rather than a prescriptive manner, we will have both volcanoes erupting in America - a financial volcano due to lack of retirement resources and a health care volcano both from government supported healthcare and from people seeking a pill to be well rather than exercising.

      We needed this reality check. Keep up the great work!

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Hello again. I just responded to your other comment. Maybe that is how it should be, up to us. Thanks for reading.

    • suzzycue profile image

      Susan Britton 

      7 years ago from Ontario, Canada

      You said it loud and clear. If we want to be comfortable it is up to us. I expect to be working long after retirement years God willing.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Deb, It seems like just yesterday when I thought I had all the time in the world. But here it is, just around the bend. With two small pensions and Social Security, I should feel fairly secure, but I don't. While researching this article, one source said that if you have a pension, rest assured that the company holding that pension is paying someone to figure out how to take it from you. So, I have to keep working on my own retirement as well. Good luck to you in all of this.

    • aviannovice profile image

      Deb Hirt 

      7 years ago from Stillwater, OK

      Every little bit helps as far as the future is concerned. I am glad that you brought this up, for it is reality staring us in the face. As always, it is just a matter of time.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Faith, I like your emphasis on being debt free. Mortgages are a big one and it is difficult to get that one resolved before retirement. You are right, that we all may have to adjust our thinking about retirement. We have grown to expect a life free from employment and work during those years. Thanks for sharing here. I always appreciate your visits.

    • Faith Reaper profile image

      Faith Reaper 

      7 years ago from southern USA

      Yes, when we are young, a lot of us do not realize or think of retirement as so far off that we have plenty of years to catch up later, but then it is upon us no doubt! I hope to retire in five years. We are just about debt free, except for the big one, the mortgage. I have a bit of retirement from when I work at an insurance company that I have in an IRA. Great article with sobering statistics.

      With my beliefs, we know that God does not speak one word in His Word about retiring in the sense the world does, so I except to continue to serve Him until I see Him!

      Up and more and sharing.


      Faith Reaper

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Hi Ruby, saving for retirement is something so easy to postpone. If young people only understood that they have a golden opportunity to begin saving a little and to keep doing it for 40 or 50 years. But for those already near retirement age, the options are much fewer and far more difficult. Thanks for visiting.

    • always exploring profile image

      Ruby Jean Richert 

      7 years ago from Southern Illinois

      Very interesting hub Cas. Extensive research i'm sure. Retirement is something every person should think about. I know it is very difficult to save when so many people only make a minimum wage, hopefully wages will rise as they should. Thank you for sharing.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Mark, your plan for retiring your mortgage by the time you are 45 is a great plan. It will help a lot in later years. Carrying debt into retirement complicates things so much more. Good luck to you. Thanks for reading.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Hi Jo, After hearing from you, Jodah and Mark it seems that the problem is not confined to the U.S. Good luck to you in this regard. Thanks for stopping by and reading.

    • Mark Lees profile image

      Mark Lees 

      7 years ago

      I thought we had a pension timebomb in the UK but looks like the US version is nuclear.

      I am 35 and my "retirement" is residual income from things I am working on now and a work pension which looks good on paper now but which I expect to be almost worthless when I retire. Luckily my mortgage will be paid of by the time I am 45 so I will have time to save a little retirement pot but loads of people are worse off than me and I am not looking forward to it.

    • tobusiness profile image

      Jo Alexis-Hagues 

      7 years ago from Lincolnshire, U.K

      The statistics are very sobering. We have the same problems her in the UK. A lot of people took out private pension plans, believing they would have sufficient funds for retirement, only to find that they are far off the mark. They're having to work for much longer than they had originally planned. With the rapidly aging population, the future is looking pretty scary. Excellent article, very well done.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      cfin, you have summed up the issues nicely in your comment. Retirement as we have come to know it has only been around for about three generations. Times are changing. Young people of your generation will have a tough time, but you will have time to plan and act. You and your wife and children will come through in good shape , I have no doubt. But that is because you are being smart. Keep at it. Those who fail to plan and act will pay a high price. Thanks for your input.

    • cfin profile image


      7 years ago from The World we live in

      Ah yes. The young people of today are paying for health insurance for older generations and social security that they will never see and only due to the fact that the government has spent the money that older generations paid in when they were young.

      These taxes that are being paid by the young, are the very amounts that the young people should be putting aside for their futures. I fear for the future. I'm 26, have a house and a second child on the way. I have a retirement fund and my wife is finishing up college debt free. I have a degree with no debt.

      Now lets look at my friends. No retirement fund, 100k in student loans or no college degree and all live with their parents or rent a small apartment. Most have a kid.

      If I am worried about my future, how must they feel?

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Hi John, it's going to be an interesting world in a few short years. So many Babyboomers are going to be needing help that won't be able to come from government. I believe we will be forced back to depending heavily on family.

    • Jodah profile image

      John Hansen 

      7 years ago from Queensland Australia

      Good hub Cam. Some worrying statistics there. People do need to take note and make plans as early as they can. It's a similar situation in Australian with Baby Boomers approaching retirement age. Voted up.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Hi Cecile, Thanks for reading. This is such a vital topic, and at the same time a sensitive topic for many people who have lost so much over the last few years. Thanks for the vote. Have a great week.

    • cecileportilla profile image

      Cecile Portilla 

      7 years ago from West Orange, New Jersey

      Excellent Hub Cam8510

      The numbers on the chart look scary. Lots of people about to become burdens on others if they don't start putting money away real fast.

      That video has some excellent points. Many parents are still spending funds that should be placed in retirement accounts on College.

      Voted up.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      7 years ago from Traverse City, MI

      Eric, It is interesting that you are looking into wind and solar. I will hopefully be building a "straw bale" house within a couple of years. I'll use wind, solar, wood, whatever to be off the grid completely. And hopefully by then I'll be debt free and stay that way. Thanks for reading.

    • Ericdierker profile image

      Eric Dierker 

      7 years ago from Spring Valley, CA. U.S.A.

      Very interesting. I am working on putting together a "writing" retirement. It is actually on schedule. And my sustainable gardening project is not just happening without much effort. My goal is to be close on both by 65. We will have to switch over to solar and wind energy and develop chicken and goat productivity. But that seems like a good idea. I think retirement will be 4 hours a day of "light farm" type work. And so I also covered disability and death through insurance through life.

      Maybe that is silly but I just cannot count on a "fund" to sustain life.


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