American baby boomers in general are not prepared for retirement. Many experts call this a crisis in the making. The crisis is that many of us will have to work into our 70’s to make ends meet, if we are healthy enough to do so. Others may not be that fortunate. Retirement will be forced upon them by health or other circumstances. They will live in relative poverty. It turns out that we are not alone. The crisis is world-wide.
- Many countries are cutting retirement benefits while also raising the retirement benefit eligibility age.
- Employers have eliminated traditional pension plans.
- Baby boomers overspent and under-saved before the 2008 recession, after which they saw much of their wealth eliminated by the downturn.
Much of the pessimistic data comes from the Organization for Economic Cooperation and Development (OECD), comprising 34 relatively wealthy countries.
The poor economic conditions in most of the OECD countries will be a significant contributor to the retirement crisis. On average, OECD governments provide 59 percent of retiree income, as high as 86 percent (in Hungary). Here in the U.S., the government provides only about 38 percent of retirement income, which is still a huge burden. This means that governments will have to continue a trend of reducing benefits and increasing eligibility ages.
Here is a typical fact pattern from the article:
Leslie Lynch, 52, of Glastonbury, Conn., had $30,000 in her 401(k) retirement account when she lost her $65,000-a-year job last year at an insurance company. She’d worked there 28 years. She has depleted her retirement savings trying to stay afloat.
“I don’t believe that I will ever retire now,” she says.
The pattern of raiding retirement accounts to fund current lifestyles is now well-ingrained in our culture. I wonder if our fellow boomers need to go into crisis mode sooner, before experiencing something terrible like a job loss?
I don’t know about you, but knowing that millions of other boomers in other countries are facing the same retirement crisis does not make me feel any better.
Here is a link to the full article.