During the golden years, where rest and leisure should be the reward for decades of dedication, the American dream of retirement is quietly turning into an elusive fantasy for many.
As financial insecurity grows with age, retirement is becoming a luxury few can afford. This grim reality is highlighted by Sen. Bernie Sanders (I-Vermont) in a new report that sheds light on the challenges faced by those nearing or considering retirement.
The National Retirement Risk Index, referenced in Sanders’ report, delivers a concerning finding: About half of all American households are poised to see a drop in their living standards after retirement. The situation is worse for 56% of low-income families and 45% of middle-income ones, all at risk of not being able to maintain their preretirement lifestyle once they hit 65. The gap widens when looking at wealth distribution, with 73% of the least affluent at risk, compared to just 28% of the most affluent.
Sanders’ report states a simple truth: “After a lifetime of hard work, Americans deserve to retire with dignity.”
Yet, the current retirement system, which benefits Wall Street, leaves many workers facing the prospect of a financially insecure retirement. The urgent need for reform is clear as more older Americans live near the poverty line. According to the Census Bureau’s Current Population Survey, over half of Americans older than 65 live on incomes of $30,000 or less annually, with nearly a quarter surviving on between $10,000 and $19,999.
The Federal Reserve’s Survey of Consumer Finances reveals another concern: the lack of retirement savings. Only 42% of Americans aged 75 and older, and 51% of those between 65 to 74, have retirement accounts. This lack of a financial safety net is alarming, especially as about 10% of older Americans live in poverty, a figure that would jump to 38% without Social Security income. Yet, U.S. Social Security benefits are lower than many other wealthy countries, offering less than 40% of a worker’s earnings compared to the Organisation of Economic Co-operation and Development (OECD) average of 51.8%.
In response to this crisis, Sanders and other lawmakers propose several legislative solutions aimed at increasing Social Security benefits, establishing automatic savings accounts for children and creating retirement accounts for those without employer options. These efforts come at a crucial time, as many older Americans not only face financial troubles but also support their adult children, while younger generations navigate economic challenges. The conversation around retirement and financial security is more urgent than ever, highlighting a critical need for systemic change to ensure that retirement with dignity becomes a reality for all Americans.
For people apprehensive about their financial readiness for retirement, consulting with a financial advisor can be a critical step toward gaining clarity and confidence in their future plans. A financial adviser brings to the table a wealth of knowledge and expertise in retirement planning, offering personalized strategies that align with an individual’s unique financial situation, goals and risk tolerance.
