A demographic stampede is about to pulverize American society. Eighty million retirees—the baby boom generation—are rapidly heading into their retirement years. And according to a survey released on Tuesday, Americans have less money than ever.
“People just don’t want to think about this.” Instead, everyone prefers to stick their head in the sand until it is too late to do anything, says Jack VanDerhei, research director for the Employee Benefit Research Institute (ebri).
According to VanDerhei, the percentage of American workers with virtually noretirement savings grew for the third straight year. Of the over 1,000 workers and retirees surveyed who were over the age of 25, a whopping 27 percent said they had less than $1,000 in savings. That’s up by over 7 percent from last year.
The percentage of workers who said they have less than $10,000 in savings (the equivalent of 3 months’ worth of average yearly salary) jumped to 43 percent, up 4 percent from 2009.
The great American recession is already taking its toll, despite still being in its early stages.
On average, U.S. consumers are going $300 in the hole per month after all expenses are met, says John Lekas, senior portfolio manager for Leader Short-Term Bond Fund. And Lekas says conditions are only going to get worse, as real unemployment (as measured by the government U6 number) heads toward 25 percent over the next couple of years.
For many families, conditions would already have been much worse had governments not borrowed billions to pay out extended unemployment benefits, food stamps and other welfare.
It is no wonder that the ebri report found that only 16 percent of respondents were confident in their ability to save enough for retirement. The finding was the second lowest in 20 years and is especially ominous because many of these workers are probably expecting to rely heavily upon Social Security and Medicare benefits—two massive and currently unfunded government liabilities. Social Security is already bankrupt (the government is borrowing money to make payments) and Medicare is projected to have a $38 trillion deficit over the course of the baby boom generation.
The nation’s retirement safety net is looking more precarious than ever. But with national health care, the wars in Afghanistan and Iraq, Iran seeking nuclear weapons, pirates preying on American shipping, and jobs being offshored to Asia, don’t expect much political action.
It is far easier for politicians to bury their heads in the sand.
Related articles: