America's Unaffordable Retirement Crisis
Munoz | CLMI
Every year, more and more Americans are either unable to retire - or they’re unable to retire in their home country. According to a 2024 AARP survey around a quarter of adults over 50 who aren’t yet retired say that, financially, they don’t expect to retire. Another 70% are worried about rising costs of living and that those costs are rising faster than they can afford to keep up with. Saving money to retire is getting more difficult each year with rising prices in rent and mortgage, as well as just the cost of rising disposable income. These factors make it incredibly difficult to build a savings for retirement. This is all against the backdrop of an American population that is aging fast: according the U.S. Census, Americans ages 65 and older rose 12.4% to 18.0% from 2020 to 2024. This results from a combination of birth rates in decline (see: Births: Provisional Data for 2023) and increased life expectancy …
The post-World War II “Baby Boomer” generation is now growing into their 60s and 70s.
But, looking deeper, much of the retirement uncertainty picture depends on income. A rising number of Americans continue to live paycheck to paycheck: on average about 60%. It is a feature of American life that’s been long ignored. Most if not all of their income goes toward necessities like rent, utilities or food. This leaves, literally, more than half of Americans with little to no money at the end of a calendar month, making the ability to build savings for an emergency or retirement incredibly difficult. In addition, the rising costs of housing rent and mortgage payments take up a big portion of most people’s incomes. For example, the average rent payment in California is $2,200 for a two-bedroom apartment while the average mortgage payment is $3,000. The national average is $1,800 and $2,500 respectively …
A study by the National Council On Aging found that older adults with less money or less financial resources tended to die 9 years before adults of the same age who had more money and greater access to financial resources. Wealth is something that is often associated with luxury and safety, but it can offer you the resources to live longer. Older adults with more money are able to afford better health insurance and can afford to get sick. While those with less money can’t afford an emergency like illness, if they were to need treatment or long term care, most wouldn’t be able to afford it.
This was the picture shown by the Pew Research Center in its recent update on aging in America …
Among adults ages 65 and older, experiences with getting older differ vastly by income. About six-in-ten older adults in the upper income tier (61%) say they’re aging extremely or very well. This compares with 51% of those in the middle income tier and 39% of those in the lower income tier. Older adults in the upper income tier are also more likely to rate their physical and mental health highly, to spend time pursuing hobbies and socializing with friends extremely or very often, and to be active in a civic group or interest club. More than four-in-ten U.S. adults under 65 (45%) aren’t confident they’ll have enough income and assets to last through their retirement years or say that they won’t be able to retire at all. Among those who are worried when they think about what their life will be like in their 70s and beyond, financial concerns are one of the most commonly cited reasons for this feeling.
Many of these retirees are not offered retirement plans by their employers. An analysis by the Pew Charitable Trust found that half of all private sector workers were not offered a retirement plan: That’s around 56 million workers in the private sector who are not offered a retirement plan at work that allows them to save. For example, a 401(k) is a program offered by employers that helps employees build savings for their retirement by automatically taking money out of their paychecks. Many companies also provide a company match, which is basically free money that they add to your 401(k). But that depends greatly on the size and scale of a company you work for: while 70% of private-sector workers have access to a 401(k) plan of some scope (an increase of 10% from just a decade ago), over 40% of small-businesses don’t offer such plans.
As Gallup finds, a sizable share of Americans have little to no access to retirement plans …
Since many people are not offered one, they are often forced to survive on Social Security. A Senior Citizens League survey found that 27% of retired adults live solely on their social security. The average social security check in California is only 1,800 - which doesn’t even cover rent (2,200) or a mortgage payment (3,000) …
Many retirees have chosen to relocate abroad to afford their retirement. The lower cost of living, as well as lower health insurance costs, are appealing to retired adults. Especially since older adults often have more health concerns, health insurance is frequently too expensive in the US. In other countries, such as Mexico or Portugal, both popular destinations for retirees seeking to live abroad, the cost of health insurance is significantly less. Besides the obviously lower cost of living, many retirees who move abroad are also looking to gain new experiences, learn a new language, or just enjoy a slower pace of life.
Unfortunately, that’s an unreachable dream for the near half of older American adults unable to retire and move abroad due to financial burden. These end in cruel and unfair options.
VICTORIA MUNOZ is a Fellow at the Civic Literacy and Media Influence Institute at Learn4Life
