The outlook for future retirees is not looking good. Earlier this week, the Government Accountability Office (GAO) released financial condition data for Americans getting close to retirement age.
More than half of all households 55 and over have no retirement savings at all. That means no IRA, no 401(k). Less than half of them have a defined benefit plan, such as a pension, that provides monthly payments for life. The rest have nothing at all – no retirement savings, no defined benefit plan.
In the next 10 years, these baby boomers would normally be looking to retire. Their future looks bleak.
There will be no retirement for them. They will probably be looking for jobs at fast food outlets, or WalMart, to survive.
According to the GAO, the median net worth of these people, in 2013 dollars, is $21,000, and their median non-retirement financial resources amount to $1,000, their median income is $26,000. Only 22 percent of them have paid off their home.
What will they do? Will Congress do something about this? So far they have not done anything meaningful about it.
If that sounds bad, and it is, there is worse news. For the group who have neither savings nor a defined benefit plan, their median net worth is around $9,000.
These figures courtesy of the Federal Reserve, from their 2013 Consumer Finances Survey.
Millions of elderly Americans have no means of support other than Social Security, as long as the system holds up.
Forty-one percent of those no savings, 55 percent of 55-to-64 households have less than $25,000 in savings, and 20 percent have less than $50,000 in savings.
The news for 55-to-64 households that do have some retirement savings, the picture is not really much better. Their median savings is $104,000, giving them an inflation-protected annuity of $310 a month.
The sad figures mean that millions of American retirees will be largely or completely dependent on Social Security for their retirement income.
We have been hearing for years that Social Security is in trouble. The Institute for Policy Innovation (IPI), in a report published after the GAO report, says the Social Security Trust Fund is declining – rapidly. Things are so bad that full benefits will only be available for the next 20 years or so.
If the 2016 candidates do not bring this forward as a campaign issue, Americans nearing retirement age probably will.
