No matter their income level, a significant number of U.S. workers are likely to struggle to meet basic expenses during retirement, a new study of baby boomers and “generation Xers” released on Tuesday shows.
Over 40 percent of people with the lowest incomes face prospects of depleted savings within 10 years after retirement, with that number climbing toward 60 percent after another decade, according to Washington-based Employee Benefit Research Institute.
For many workers, having savings in a 401(k) plan or similar retirement vehicle can make the difference between security and struggle in retirement.
“How long you’ve been in a 401(k) plan is the number one thing showing if you’ll have enough retirement income,” Jack VanDerhei, EBRI’s research director, told Reuters.
Higher-income workers are not totally immune to financial troubles down the road.
EBRI’s retirement-readiness rating for 2010 showed that the two top earning groups face a significant, if smaller, risk of not being able to pay basic expenses and medical costs later in life. Nursing home costs sting higher earners in particular later in life, VanDerhei said.
The results are the latest wake-up call for policy-makers and households about the realities of modern retirement as millions of baby-boomers hit retirement age every year.
The warning comes despite improvements in retirement savings levels since 2006 when many employers adopted automatic enrollment guidelines for 401(k) plans, said VanDerhei.
In the last 20 years or so, many U.S. companies have dropped defined benefit pensions that pay out a regular sum in favor of plans such as 401(k)s in which a worker puts aside pretax dollars to build a retirement nest egg.
But for many workers, 401(k) balances are still relatively small. The study’s results are based on a model weighing inputs including age, income, retirement contribution tendencies, savings plan changes and employee behavior from a database of 401(k) participants.
Based on these factors, EBRI found that 47 percent of the early boomers, now 56 to 62 and nearing retirement age, are likely to exhaust their retirement savings.
Late boomers, now aged 46 to 55, and Generation Xers, defined as being between 36 and 45 years old, run roughly a 44 percent chance of running short of money.
In each case, though, the estimate of “at risk” individuals has fallen since 2003, when EBRI previously conducted its readiness survey.
For those on the brink of retirement, the only solution may be to keep working. But for younger workers there is still time to correct the imbalance by squirreling away more money.
“In some cases, an extra five to 10 percent of compensation (put toward savings) will get you where you need to be,” said VanDerhei. “But you need to start now.”
Bail them out!!!
If you didnt save enough for retirement, thats your problem. Not mine. Nor the government’s. But, I have a feeling Im going to have to pay for it when the bleeding-heart liberals raise my taxes. Thanks alot, baby boomers.
When so much of our wages goes to taxes and paying for free programs for illegals, is anyone surprised?
“Paying for free programs for illegals”. Get your head out of your tush Anne. How about the greatest income disparity in our history along with two unfunded wasteful wars and tax cuts to the rich?
All courtesy of our good friends, the Republicans. Go ahead, Anne, tell me how it’s all Obama’s fault.
Anne: Whatever happened to the conservative canard of taking personal responsibility for your own failures instead of playing up the victim mentality?
Anne – please learn some facts. In 2009 54% of the Federal Budget went to the Pentagon.
http://peoplesgeography.files.wordpress.com/2007/05/us-fed-budget-outlays-piefy08.gif
Less hate, more thoughtful discourse based on facts please.
My 401k lost 40% during the downturn and has not recouped those losses. I am sure a great many Boomers will be unable to retire if they are lucky enough to have a job.
The attitude of your article is that all Boomers were negligent in their savings when the truth is the stock market and economy has a lot to do with the shrunken savings. Long term unemployment for the over 50 layoffs is a big problem and will only continue to add to the lack of savings.
As a divorced woman who started over in her 40’s with nothing, I expected to work until 72, I put the max in and had managed to save 6 months living expenses just in case. I lost my job almost 3 years ago and have been unable to find any work. Lately, I have been told to enjoy my early retirement. At 54, I know I will not have enough to ever retire now, that is if anyone will ever hire me.
Perhaps there’s not enough in the 401ks because Wall Street paid it all out in bonuses under Bush’s deregulation watch.
I should’ve gotten one of those sweet pension paying jobs the state and federal govt gives out. I could’ve bounced around so I could double or triple dip. My mistake.
401K is the biggest hoax around, I have not recovered since the big market meltdown in 2000. I will no longer invest any of my money in a 401K. The housing market is at an all time low now. Buy property for a bigger return.
My father was in a nursing home and it ran him $80,000 per year. That included his medications and his insurance. Luckily, he had social security, a very tiny pension and he had bought some long-term life insurance a couple of decades before he needed it.
It is very scary to get old and depend on others.
Yes, keep putting your retirement savings in the market. European countries (and soon the USA) will need to borrow that money in the form of bonds to prop up their unsustainable economies.
If you don’t like the bond market, you can always go to private stocks. Just keep it under your cap because the government is blaming business for being too greedy and the pay czar is soon going to be telling you how much you should be living on.
What a useless article. It neither tells us how much we should have nor what people actually have, just repeats the inane dictum that putting an extra 5% in a 401k that at some point Wall Street will cause to tank again will somehow make the difference.
I think that baby boomers are also stuck in the middle of supporting elderly parents, whom are living longer and longer lives, and trying to support children, helping with college, etc. It is stories like these that make me realize that starting to save at a very early age really does make a huge difference, but it is hard to think of the future when you are that young and our society programs us into thinking that we need things like multiple cars, bigger houses, fancy phones and computers, etc.
I love how these articles always suggest working longer. Hello! Of the laid off people I know (and I am one), most of the ones over 50 are the ones who cannot seem to find any other work of any type, and certainly not of the level to pad that 401K. I planned to work longer for just the reasons outlined in the article. Like many of my peers, that is now just a dream. Unemployment hits two classes of people hardest – those fresh out of college and the baby boomers. Yet where is the uproar? Where are the news articles? Is anyone listening??
Anne’s comment is beyond idiotic. Lady, don’t invert things; if YOU do not have enough in YOUR 401k for YOUR retirement, it is nobody’s fault except YOUR OWN.
Good job bringing up unrelated issues, though. Why not blame the oil spill and the overturning of the city’s gun ban while you’re at it.
I agree with Anne above. Why do we continue to pay high taxes and free programs for illegals? May I suggest the government enforce the laws that exist, have accountability for how and what they spend the taxpayers money on. What about the government workers who end up losing their jobs for corruption but are still able to collect their pensions?
Retirement? Most “Gen X’rs” I know are still trying to afford a kid and buy their first home.
When you consider that this last asset bubble, fueled by easy credit and reckless borrowers, caused every investment vehicle to drop precipitously (one of my IRAs has lost 60% of its value), it’s no wonder many boomers don’t have enough to retire.
The sad thing is, the federal reserve is determined to keep interests rates artificially low in an attempt to lure more reckless borrowers into the arena. If the interest rates were allowed to rise, then, savers like me, could park our money in CDs and MM funds that paid out more than a paultry .5%!
I may not be able to afford to retire but you bet your life I will apply for the MEASLY early social security just to know I will have SOME income.
More of our taxes go to the military industrial complex than anything else, particularly any monies to “illegals”. Let’s become a nation of peace, not war and hate, and become financially solvent at the same time.
This is the generation that started the “it is all about me” trend. The 60’s free love and ensuing government should take care of us mentality is their creation. This is why they did not plan to take care of themselves. It is the rest of society’s job to do so. They paid their “dues” after all. I know many people of my parent’s generation that feel this way. Unfortunately they did not pay as much into social security as they are going to take out. This is one of the reasons why the system is going to collapse. I have paid a lot of money into social security but don’t believe it will be there for me in 25 years when I am eligible.
More racist hate from the rightwing! There are NO “free programs for illegals,” no matter what manure you hear from Faux news or the teabaggers. People like Anne make me truly hate most Americans.
With the taxes going up all the time, no one can save to put anything away for retirement. Obama now wants those that do not have a 401K at work to have a IRA – and of course you will not have any choice in the matter either. It will be done or else – just like his health care – whether you need it or not the government is going to force you in to it. How’s that change now? More lost freedoms! Thanks Obama – NOT
What? 7 trillion dollars in retirement funds went down the drain in the economic collapse. The more you look at the ITIN Loans.. and they were made in mass by the illegal aliens, the madder you get.
But I believe.. to my core I believe.. party politics played a huge role in our circumstances today.
I want a government that does four things before all others.
1. Protect the good people from the bad people
2. Protect the good people from bad businesses
3. Protect good businesses from bad people.
4. Protect good businesses from bad businesses.
We don’t need Immigration Reform: we need a new President and a new ICE director that enforces the law. Can do people.. not .. Oooooh dear people.
Retirement? Forget about it. My best case scenario is to die before I’m too old to work. I’m 42 years old and have almost nothing left of my savings. I was lucky to have landed a job after my employer of the last 20 years went under. Now working a job at a fraction of my former salary, I can’t save a dime now. I’d be happy to be able to work another 20 years and check out before I can’t do it anymore and loose my health insurance.
And with the stock market changing so much, we continually loose a lot of our 401K values. I’ve sunk some of my money into CDs, but I know the interest isn’t all that great, but at least I don’t see any minus signs after the dollar amounts on my statements. I fall into the catagory of “late baby boomers”. I would love to purchase my own home, but I don’t know if I’ll have a job two years down the road because I am currently working contract.
Anne,
Don’t you think big business wants them here. They can pay them nothing work them to the bone, and if they get hurt on the job tough. The real problem is that big business runs this country. I think it should be like nascar where the politicians have to wear their sponsors. They need to really penalize business for hiring illegals.
As a boomer I used to wonder what I was doing wrong when I would see other people my age constantly taking expensive trips, buying boats and new cars every year while I paid my bills and saved for the future. I would wonder why I could not afford them as well. It turns out I was not doing anything wrong rather I was doing everything right! I am going to have a great retirement because I sacrificed and planned for it.
Unless somebody had a catastrophic illness I have no sympathy for the boomers that are about to come up short in their retirement. Tomorrow was never going to come for them. Well guess what its here and how much comfort and security will those trips, cars and boats that are long gone bring you when you retire? NONE! Boo Hoo! They should have lived within their means and saved for the future the way our parents taught us to do.
What do the hell-no-we-won’t-go self worshiping narcissistic baby boomers care?
They are a population majority and will do what they have always done: get someone else to pay for their sloth. They will just raise taxes on the younger generations and elect representatives to shower them with government entitlements for an easy and comfortable retirement.
They don’t care what will happen after they are dead; that’s someone else’s problem.
How about raising the allowable pre-tax 401k contribution? I save the maximum allowable amount per year, but still don’t feel I’ll be appropriately funded for retirement. Most companies have eliminated pension plans and we cannot count on the Social Security payout (that we diligently pay each pay period). Two cents from the peanut gallery (or should I make that $20 by the time I retire?).
“When so much of our wages goes to taxes and paying for free programs for illegals, is anyone surprised?”
Undocumented workers are here because businesses hire them. They, for less than minimum wage, make your clothes, pick your crops for market, work in your restaurants and do your janitorial work, etc. By keeping prices for services like this down you are probably getting the best of the deal. In addition, our government allows many to pay taxes and into social security with no promise they will see that money ever again. So, stop buying that GOP propaganda because I wouldn’t be surprised if many GOP businesses are hire them. (Wasn’t it Bush the second who wanted the guest worker program?)
This is stupid. I just retired knowing exactly how much I was getting. If 47% of baby boomers don’t have enough blame themselfs, but don’t ask for the Federal Government to bail you out because you spent that retirement savings on yourself when younger.
I just did but you didn’t post it.
And what free programs for illegals would those be?
That’s because the medias keep telling people you need an I-PHONE, expensive shoes, big cars & big houses to be important in this world.
You said it, Anne!
This article seems to have been written on another planet in which there is no unemployment, underemployment, or job discrimination. Many of us depleted our savings during these spans, and many of us are still in them. How are we supposed to save for retirement while we can’t even make ends meet today? Oh, but I forgot: unless you’re affluent, you’re not a “Baby Boomer.” That’s part of the media stereotype. A person who is unemployed, broke, homeless, or a felon might have an age in years, but he doesn’t get labeled a “Baby Boomer” in the media.
it’s the greed of the boomer generation that brought this country to it’s knees. outsourcing jobs, fleecing the middle class, chasing one bubble to the next… all out of self importance and self serving motives. shame on the boomers. you got what you deserve.
I agree we pay way to much in taxes. But give me a brake. Do we always have to blame someone else? Maybe its our over spending.The instant gratification that most of us need that keeps us from saving enough.
Perfectly stated Anne! Not to mention Public Aid, Medicaid, WIC, LINK and section 8 funding. They want everyone to crawl to the government for help…even if you worked your butt off for 50 years. The government is our worst enemy…stealing your hard earned money and re-distributing it to generations of welfare recepients and illegals.
Baby Boomers. The sooner they’re gone the better. I grew up in the 80’s having to hear (from boomers) how they changed the world with their protest marches and love-ins and let’s not forget Woodstock. In truth, they were and are the most self-centered generation ever. During the Vietnam War, they went after service members instead of soley the politicians who got us involved. Their sexual revolution accelerated the spread of venereal disease and HIV. What about divorce rates and illegitamacy? And now that they’re old and things aren’t working so well for them anymore, the’re going to bankrupt this nation with their healthcare bills. As far as I’m concerned, the boomer generation is this country’s problem child. You know, the one that had all the opportunities for greatness but squandered them on a “good time”.
Wait until the full effects of the massive debt hits. Inflation, high interest rates, and high taxes will destroy the value of many 401Ks. Only 1 in 4 will have sufficient retirement funding.
What people should be surprise at is that ignorant people like Anne can’t see the big picture of why baby-boomers don’t have enough to retire. Instead, they direct their anger towards a minority with little or no power to fight or answer back. Anne, think deregulation of the banking sector, off-shoring of jobs, out of control health care costs, stagnant wages. Try wrapping your head around those things.
Dave, I don’t know why you would call Annie ignorant, what she says is true but then again you bring up good points as well. But to deny that our policy of funding entitlement programs for those who do not pay their own way isn’t seriously hurting those of us who do, is being extremely close minded in my view
James William’s post disturbs me. I could not possibly lump millions of people into one pigeon hole of behavior no matter what the group. These age classifications and descriptions are all basically prejudiced, hateful, and inaccurate whether it is about boomers, xers, y’s, and so on. I didn’t do any of the things James list and certainly agree that each person is responsible for their own fate to the degree they can control it. This recession has taken many people’s lives beyond their control no matter how careful they were. Yes, some were irresponsible in all age groups, but some were victims and are suffering greatly again in all age groups including 22 year olds who can’t find a job and 60 year olds who were ousted after 30 years of work.
As the article points out, Boomers have less saved for retirement. Boomers are rethinking how & where to retire. Lake Weir Living (LWL) in Central Florida has evolved the active adult/retirement lifestyle concept to answer the needs of today’s Boomers. Boomers can still have fun and play hard. LWL, is a “Toy-Friendly” Community (8 miles from The Villages & 55 miles to Orlando), for Boomers frustrated with oppressive HOA restrictions & fees. New custom-homes from the $90s with no HOA and toy-fitted garages for “Toys” such as boats, motorcycles, RVs, and more. Visit our Blog for videos:
http://www.lakeweirlivingblog.com
Lake Weir Living, in Central Florida is for Outdoor Enthusiasts. LWL is a “Toy-Friendly” Community of new custom homes with no HOA and toy-fitted garages for “Toys”. Typical active adult & retirement communities have limitations or prohibit (Big) “toys”. People are passionate about their “Toys”! It is a more well-rounded & fulfilling lifestyle. LWL Blog for videos:
http://www.lakeweirlivingblog.com