Are We Really Facing a Retirment Crises? by Scott Stolz (week 16)

 

Forbes recently published an article entitled “The Looming Retirement Crises is Real and So Are the Solutions” (The Looming Retirement Crisis Is Real And So Are The Solutions.)  A quick search on any search engine and you will find other stories that discuss this “Retirement Crises.”  In fact, it’s easy to find plenty of statistics that support the case for such a crisis.

ThinkAdvisor recently published a list of “13 Scary Retirement Statistics” (13 Scary Retirement Statistics to Read in the Dark: 2025).  I won’t cover all 13, but here are a few that jumped out at me:

1.     Nearly 6 in 10 workers expect to outlive their retirement savings

2.      62% said that caregiving of other family members is keeping them from saving for retirement

3.      Half of all workers are prioritizing savings for their children’s college over saving for retirement

4.      40% of all retirees are living on less than 50% of their pre-retirement income – and that includes their Social Security benefits.  In contrast, most financial plans target a retirement income of at least 70% of a person’s retirement income.

And while it would be logical to assume that the caregiving statistic involves taking care of parents, this support is just as likely to be supporting adult children.

A recent study by Savings.com found that on average, parents are providing almost $1,500 per month in support of their children age 18 and over (Percentage of parents financially supporting adult children reaches a three-year high).  Not surprisingly, most of this support is going to GenZ children (18-28), but a surprisingly large amount is going to Millennial children (29-44).

 

It seems as though pre-retirees and retirees are being squeezed at both ends.  Not only are many providing support to their aging parents, but they are still providing a meaningful contribution to their children as well – all while trying to save for their own retirement.  No wonder 60% expect to outlive their retirement savings despite the fact they are targeting a retirement income equal to less than ½ of their current income.  And consider the cycle this creates.  If they begin to outlive their retirement savings, then their kids are going to have to help them, which in turn makes it harder for them to save for their own retirement. 

But I want to pose a question to the financial advisors out there.  You live this with your clients every day.  Are we facing a retirement crisis?  Are we already in one?  Are your clients going to run out of money?  If not, why not?  Is it because you only work with clients that have enough, or is there something else going on that is allowing people to be OK in retirement?  Please share.

 

 

 

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