AARP's survey reveals a significant retirement crisis, with one in five older Americans lacking any savings and many facing the prospect of never retiring due to escalating living costs.
A recent survey conducted by AARP highlights a growing retirement crisis in the United States, revealing that a significant number of older Americans feel unprepared for retirement, with many having little to no savings at all.
Pam Tourangeau, a 68-year-old part-time therapist, embodies the concerns of her generation, noting the absence of substantial pension plans that were once common. "Fatigue is a big part of getting older," Tourangeau expressed, acknowledging the generational gap that has left many baby boomers without the financial security of previous generations. "They don't do that anymore," she said, referring to the shift from employer-provided pensions to employee-funded retirement plans like 401(k)s.
The AARP survey, released on Wednesday, paints a grim picture for Americans aged 50 and above. One in five respondents reported having no retirement savings, while over half doubt they will have enough money for a comfortable retirement. The survey also found that inflation is exacerbating financial strains, with 37% worried about affording essential expenses and 70% concerned about prices rising faster than their income. Alarmingly, 26% of older adults not yet retired believe they will never be able to retire.
Indira Venkateswaran, AARP Senior Vice President of Research, emphasized the importance of retirement with dignity and financial security. "Yet far too many people lack access to retirement savings options," Venkateswaran said, adding that the high cost of everyday expenses is a significant barrier to saving more for retirement.
Despite the high level of the US civilian labor force for those 55 and older, the labor force participation rate remains lower than the pre-pandemic rate in February 2020. This indicates that many older Americans continue to work, some out of necessity, as they may have to rely on whatever savings they have managed to accumulate.
The urgency of addressing the retirement savings deficit is underscored by the impending retirement of the "peak boomer" generation—Americans born between 1959 and 1964. An analysis by the Alliance for Lifetime Income's Retirement Income Institute suggests that over half of this group has $250,000 or less in assets, which could lead to depleted savings and increased reliance on Social Security, a program facing its own financial challenges.
