A retirement crisis is creeping up on America, as pension options are increasingly disappearing and private sector employees are simply not saving for retirement.
According to a recent poll conducted for CNBC, 56% of Americans don’t believe they will remain on the track towards retiring on time.
61% of those surveyed say that they live paycheck to paycheck, while 41% don’t contribute to any 401(k) or company-sponsored retirement savings account.
Many of the youngest in the current workforce, Generation Z, don’t even know how much they might need to retire comfortably, and only 28% of Gen Z – born 1997 to 2012 – expect to retire at age 65, and fully stop working according to a 2023 Georgetown University Study.
From these numbers one could assume that saving for retirement is either not yet a priority, or becoming impossible for younger Americans to fit into the economics of their lives.
According to new analysis by the Pew Charitable Trusts, this pattern may put an enormous strain onto government agencies of all types that private citizens will need to rely on.
Longtime Association of BellTel Retirees Board Member and former CFO Don Kaufmann, said, “Increasingly, corporations are losing the trust of the people they employ to keep the workforce and retirees’ best interests in mind. It’s why supporting proposed amendments to the Employment Retirement Income Security Act (ERISA) is of the utmost importance to protect retiree pensions.”
Mr. Kaufmann was one of the national retiree leaders who presented testimony in the summer of 2023 to the ERISA Advisory Council, made up of federal officials from the U.S. Department of Labor.
According to Pew, households that include people currently 65 years or older with an annual income under $75,000 are most vulnerable.
Pew states that by 2040 the number of families that fall into that vulnerable category will grow an astounding 46%.
A demographical analysis by Pew projects that because of this spike, U.S. states face an estimated $334.3 billion tab for projected increased costs due to residents having insufficient retirement savings set aside.
Should Pew’s projections become a reality, the question then is, how much of a strain would this place on the State or Federal level?
Comparing US Retirement -vs- Global Communities:
The Mercer-CFA Institute’s 2023 Global Pension Index calculates and grades the retirement income system of countries across the globe. In it, the U.S. earned a C+. Other nations in the same category include Spain, Croatia, Colombia, and Kazakhstan.
According to the report a C+ means that a country’s retirement income system has, “some good features but also has major risks and/or shortcomings that should be addressed; without these improvements, its efficacy and/or long-term sustainability can be questioned.”
Across the nation, the calculus is that nearly 70 million workers don’t have access to employer retirement plans, as found by the Economic Innovation Group from its analysis of 2021 U.S. Census data.
BellTel Chairman Tommy Steed added, “for every single person, the retirement picture will look different. What is written in stone in our American system, is that the social security benefit that has been promised to us starting with Franklin Delano Roosevelt is a great American safety net. According to the Mercer study, the Scandinavian countries – Netherlands, Iceland, Denmark and then Israel have the most solvent pension systems and are to be envied.”
He continued, “But change won’t occur on its own. Back in January, the youth and workers were rioting in the streets of France and conducting work stoppages because their government was planning to raise the retirement age, but here in the U.S. it seems our workforce and retirees need to stand up and fight back, and that is what the Association is trying to spur on among our community. Join us in standing up to the big bad corporate goliaths.”
One option put forth by Pew researchers is automated savings programs. These types of programs automatically enroll workers who do not have access to retirement savings plans at work, in an individual retirement account (IRA). Such programs support individual savings and allow for employees to rely less and less on government programs.
California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, New Jersey, New York, Oregon, and Virginia have all passed legislation establishing similar programs with some success.
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