"Early Boomers will need to save an addition three percent of compensation each year to cut in half their chances of running out of money to make up for losses sustained in the financial crisis.”
For many Baby Boomers, the American Dream of a comfortable retirement as the reward for working hard and playing by the rules is fading. Florida resident Joanne Jacobson, 63, believed her promised pension and health benefits would be enough to sustain her through retirement. Last year, her benefits were all but eliminated by her employer. Faced with little retirement savings and no health insurance, she was forced to return to the workplace.
Jacobson’s plight was one of the increasingly all-to-familiar stories related at a hearing held this week by the U.S. Senate Special Committee on Aging.
Senior citizens, particularly Baby Boomers are facing increasing challenges in ensuring that they do not outlive their money, noted committee chairperson Bill Nelson. “People are retiring with less, but more money is going out to pay off debt and medical bills,” he said. “This doesn’t factor in the financial challenges of seniors with long-term health care needs.”
Between the lingering impact of the recent recession and higher medical costs, he said, “Baby Boomers are on shakier financial footing than their parents and grandparents.”
Ten thousand Baby Boomers will turn 65 daily for the next 17 years. “After four decades in the workforce, they should have confidence that they will not run out of money (in retirement) and fall into poverty,” said ranking committee member Sen. Susan Collins. It is estimated, she said, that “Early Boomers will need to save an addition three percent of compensation each year to cut in half their chances of running out of money to make up for losses sustained in the financial crisis.”
Other grim statistics noted at the committee hearing:
· According to the U.S. Bureau of Labor Statistics, the number of Americans at least 65-years-old who reported working rose 64 percent in the decade beginning January 2003.
· In Susan Collins’ home state of Maine, one-in-three retired residents rely entirely on Social Security for their income, an average annual benefit of less than $15,000. “Certainly a ‘comfortable retirement,’ seems out of the question, she said.
· A growing number of people are entering their retirement years deeper in debt, testified Olivia Mitchell, director of the University of Pennsylvania’s Pension Research Council. “The percentage of people ages 51-62 who were in debt increased from 64 percent to 70 percent between 1991 and 2008, she said, but the amount of average debt jumped from $6,200 to $28,300. “This is a challenging time to be growing older in America,” she said in her statement
Among the remedies suggested by the panel include improved financial literacy and retirement planning for Americans young and old, mandatory contributions up to 10 percent of their waves in a retirement savings account, prohibiting employees from accessing funds from their 401(k)s prior to retirement, Social Security reform, and encouraging more small businesses to offer retirement savings plans.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.