Is Retirement Crisis Overblown?

[wageslave23]

I have been looking for an article with this type of data for years.  I've always been skeptical of the _% of Americans have $0 saved for retirement (who are they counting and what are they counting?).

https://www.msn.com/en-us/money/markets/opinion-fears-of-a-retirement-crisis-are-overblown-%e2%80%94-and-these-numbers-prove-it/ar-AAEt2Mo

[Bloop Bloop]

I don't see anyone starving in the streets. So there's no "crisis".

[flipboard]

I don't see anyone starving in the streets. So there's no "crisis".

You've clearly never visited the USA. Consider yourself lucky : )

[Bobberth]

The average income of you and Kevin Durant next year is $20 million. Congratulations!

I thought it was weird that the article kept switching between average and median numbers. Even in a 3 sentence paragraph they switch between them. Then I got to the end and saw that it was written by the AEI. I would take the article with a truckload of salt.

[wageslave23]

The average income of you and Kevin Durant next year is $20 million. Congratulations!

I thought it was weird that the article kept switching between average and median numbers. Even in a 3 sentence paragraph they switch between them. Then I got to the end and saw that it was written by the AEI. I would take the article with a truckload of salt.

Are you referring to this paragraph?  Because it is the only time I see it switching between median and average.  And in this context it is completely appropriate.  It refers to median and only references average when talking about the median individual's average yearly earnings, this is not averaging across individuals. 

For myself, I’ll rely on the best retirement model in the business, which belongs to the Social Security Administration and has been improved and double-checked for over two decades. The SSA model finds that the median household born in the Great Depression retired with a total retirement income equal to 109% of their inflation-adjusted career-average earnings, far above the 70% replacement rate financial advisers recommend. Now fast forward to Gen X, who we are led to believe face a retirement crisis. For Gen-Xers, SSA projects a median replacement rate of 110% of career-average earnings.

The most important point in the article was:

But what about all those pessimistic studies the news media loves to cite? Many have flaws, both in terms of how they project future retirement incomes and how they judge how much income retirees will need. For instance, a 2019 Government Accountability Office study claims that “about half of households age 55 and older have no retirement savings.” But the GAO counts those who have a traditional pension and no 401(k) or IRA accounts as having no retirement savings. That’s nuts given that 45% of Americans 55 and older are still owed pension benefits.

People like my parents who have no savings but a great pension are going to be a lot better off in retirement than someone like me who will have $1M in savings and no pension.  To include people like my parents in a percentage of people who are unprepared for retirement is blatantly dishonest.

[frugalmom]

I talk to people everyday that cannot afford their medication.

People that worked their whole life

[BuddyXL]

I know of around 6-7 people who are into their 70s and are still working because they have to.  I don't expect they show up in any statistic but if they didn't work, their SS would not likely cover all of their costs as they have no pension or retirement plan.

So they can't really "retire" unless they want to suffer financially.

And this scares the hell outta me as I don't want to end up that way!

[rantk81]

Barring some very recent personal catastrophe -- It's not like somebody just instantaneously arrives at the age of 70 with zero retirement savings.  Folks in that situation have known for the greater part of a century whether or not they had a pension, and have been advised to save for retirement all along.  If they choose to consume 100% (or more) of their earnings throughout an entire career, there should be no surprise that there's nothing for them except for SS.  For those who had been working at extremely low income levels, their social security checks will be very close to what their income was anyway (due to the highly progressive nature of SS bend points.)  For those who earned more than that -- it was their choice to over-consume throughout their life.
I'm all for a safety net... but sometimes you have to call out a lack of personal responsibility too.

[PaulMaxime]

The idea that most people had a pension back in the day is flawed. Only those who spent their whole careers at a very large company even had a chance of this.

The reality before Social Security was that most people worked until they died.

https://www.fool.com/investing/general/2013/05/02/the-biggest-retirement-myth-ever-told.aspx

The truth is that the number of people aged 65 and older living in poverty is the lowest it's ever been.

Let me clearly state what these statistics do not show. They do not show that Americans are prepared for retirement, or that there is no retirement crisis.

There is a retirement crisis.

But there always has been one.

The lack of savings is a grim problem that will affect millions of Americans for decades to come.

But that's nothing new.

Most retirees will have to cut back on their standard of living.

But they always have.

Many will be reliant on Social Security.

But that's been the case for decades.

"When all is said and done," Adams writes, "we're all still challenged to find the combination of funding -- Social Security, personal savings, and employment-based retirement programs -- to provide for a financially satisfying retirement."

"Just like in the 'good old days.'"