There’s a retirement crisis looming for many Americans — and some are already living on scant incomes. Retirement becoming a luxury for Americans hoping to get a reprieve in their later years is something a handful of lawmakers are hoping to change.
A new report from Senator Bernie Sanders, the chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, looks at the bleak future facing some older Americans and those who hope to retire someday.
The report cited the National Retirement Risk Index which found that around half of households “will not be able to maintain their pre-retirement living standard,” and 56% of low-income households — and 45% of those who are middle-income — were “at risk” of not maintaining those pre-retirement standards at age 65.
Even more glaringly, 73% of those in the bottom group of wealth holders were similarly at risk, compared to 28% of those in the highest wealth group.
“After a lifetime of hard work, Americans deserve to retire with dignity. But with our retirement system focused on increasing profits for Wall Street, a financially secure retirement is beyond the grasp of many workers. The time to change that is now,” Sanders’ report said.
Americans’ struggle to comfortably retire could prove costly — a 2023 Pew Charitable Trusts study suggests that, as more households with older Americans become financially vulnerable from 2021 to 2040, state governments will take a $1.3 trillion hit — and devastating for retirees, who may find themselves cash-strapped and unable to afford healthcare or housing in their later years.
And, for some, the retirement crisis is already here. Just over half of Americans over the age of 65 are living on incomes of $30,000 or less a year, according to the Census Bureau’s Current Population Survey. The largest share — just under 23% — have incomes between $10,000 and $19,999.
Many Americans hoping to age out of work may also not have retirement accounts to fall back on, or to use as a cushion. Just 42% of Americans 75 and older held retirement accounts as of 2022, according to the Federal Reserve’s Survey of Consumer Finance. Similarly, only 51% of Americans 65 to 74 held retirement accounts.
And, as Sanders’ report notes, about 10% of older Americans live in poverty, according to an analysis from the Center on Budget and Policy Priorities. Without Social Security income, around 38% of Americans 65 and older would be living below the poverty line. Even so, America’s Social Security benefits lag behind many other wealthy countries; benefits amount to, on average, 51.8% of workers’ earnings across the OECD. In the US, they fall under 40%.
Among G7 countries — a group of wealthy, industrialized democracies — the US trails only slightly behind Japan when it comes to elder poverty rates, defined by the OECD as making less than half of median income.
Some lawmakers, like Sanders, have proposed potential legislative solutions, like beefing up Social Security checks, setting up kids with automatic savings accounts, or automatically setting up retirement accounts for lower and middle-income Americans whose workplaces might not offer them.
All of that comes as older Americans see their adult children leaning on them financially, as Gen Zers and millennials weather their own economic storms.
“I’m really expecting the landscape of the economy for this generation that my children are in to be dismal,” Jane, a boomer who unretired to help support her Gen Z kids, previously told BI.
Are you struggling to retire, or worried you’ll never be able to retire? Contact this reporter at jkaplan@businessinsider.com.
