Since the Great Recession, older American workers’ savings, investment and retirement accounts were seriously depleted as they became worthless and households had to dip into these funds to cover their bills. What about younger Americans and their retirement in the next few decades? If one were to ask them, they’d likely respond with: what retirement?
According to a new study by the Transamerica Center for Retirement Studies (PDF), one-third of American workers today believe their standard of living will diminish when they hit their retirement years. Forty-one percent said their living standards will likely stay the same and 17 percent say it will increase.
The survey also discovered that a majority of Baby Boomers – individuals born between the years 1946 and 1964 – noted that they expect to keep working after the age of 65 or don’t plan to retire at all. The same can be applied to more than half (54 percent) of Generation X – people born between the years 1965 and 1978 – and 40 percent of Millennials – Americans born between the years 1979 and 1996.
“As the economy continues its recovery, workers can further improve their chances of achieving a comfortable retirement by taking steps today to update their retirement savings goals and finding a road map to achieve those goals,” said Catherine Collinson, president of the Transamerica Center, in an interview with USA Today. “Most people plan to work longer and retire at an older age. Yet with a solid strategy, many may be able to retire sooner, transition with greater flexibility and on their own terms.”
Unclear retirement plans have become even more prevalent these days because of longer lifespans – the average life expectancy is expected to be 80 by the year 2020 (PDF). Financial experts say that most retirement strategies are inadequate to address the needs of older Americans who live much longer than they and their finances had intended.
With the paucity of well-paying jobs, a low national savings rate, disinterest in investing, immense consumer debt levels and a rising cost of living, the concept of retirement might become a foreign idea to many in the next couple of generations.
“There tends to be a false sense of security when it comes to planning for retirement,” stated Noel Archard, head of BlackRock Canada, in an interview. “We hope that the money will somehow be there when we need it but we’re not taking the action required to ensure it is. This is a serious problem, and addressing it must become an urgent priority.”
Although there are a number of routes a person can take to ensure a more fiscally manageable retirement, most financial experts suggest to incorporate the below measures to improve your winter years and ensure you can live comfortably in your 70s, 80s and perhaps even 90s:
- Save early, invest more
- Pay off all of your debt
- Live within your means
- Consider a part-time or freelance job
- Produce a reasonable retirement strategy
