By Gail MarksJarvis
Half of U.S. households headed by a person 55 and over haven’t stashed away any retirement savings.
And while old-style pensions will help some of them put food on the table, 29 percent of such households don’t have a pension.
The data in a report by the U.S. Government Accountability Office paint a sorry picture of a nation on the verge of massive growth in its retiree population. Between this year and 2030, the number of people over 65 will grow 50 percent to 74 million retirees, accounting for 20 percent of the population.
And 2034 is the year the Social Security trust fund is expected to run dry. Although FICA deductions from paychecks will keep some money flowing to retirees, the Social Security system will be able to pay only 75 percent of the benefits workers have been promised. Since Social Security is essential to many retirees, any decrease would be painful.
It’s not only the non-savers who face a troubled future. Although 59 percent of people 55 to 64 have some savings, the amounts are often tiny. In that group, about half have accumulated just $104,000 or less; 24 percent have $25,000 in savings or less. While studies show most people have no idea what will be enough in retirement, $104,000 is clearly bare-bones at best.
If a person put all $104,000 into an annuity that adjusts for inflation, that annuity would start out providing just $310 a month. A person could count on these modest checks, with tiny increases for inflation, over the course of retirement. Today’s average monthly Social Security check is about $1,330, so consider what $1,640 monthly from savings and Social Security combined would cover.
The report notes that various studies have found between a third and two-thirds of workers are at risk of ending up in retirement without enough money to carry on their current lifestyles. While the lowest-income workers are in the worst shape, about 43 percent of people in the top third of incomes also won’t be able to maintain their standard of living, according to the Center for Retirement Research at Boston College.