- A new report from Sen. Bernie Sanders signals a looming retirement crisis for Americans.
- Many older folks are financially vulnerable, with over half living on incomes of $30,000 or less a year.
- Solutions might include enhancing Social Security checks and setting up automatic retirement accounts.
There's a retirement crisis looming for many Americans — and some are already living on scant incomes. Retirement is becoming a luxury for Americans hoping to get a reprieve in their later years, and it's something a handful of lawmakers are hoping to change.
A new report from Sen. Bernie Sanders, the chair of the Senate Health, Education, Labor, and Pensions Committee, looks at the bleak future facing some older Americans and those who hope to retire someday.
The report cited the National Retirement Risk Index, which found that about half of households "will not be able to maintain their" preretirement living standard and that 56% of low-income households — and 45% of those who are middle income — were "at risk" of not maintaining those preretirement standards at age 65.
Even more glaringly, 73% of those in the bottom group of wealth holders were similarly at risk, compared with 28% of people in the highest wealth group.
"After a lifetime of hard work, Americans deserve to retire with dignity," Sanders' report said. "But with our retirement system focused on increasing profits for Wall Street, a financially secure retirement is beyond the grasp of many workers. The time to change that is now."
Americans' struggle to comfortably retire could prove costly and devastating for retirees who may find themselves cash-strapped and unable to afford healthcare or housing in their later years. A 2023 Pew Charitable Trusts study suggests that as more households with older Americans become financially vulnerable from 2021 to 2040, state governments will take a $1.3 trillion hit.
And for some, the retirement crisis is already here. Just over half of Americans older than 65 are living on incomes of $30,000 or less a year, according to the Census Bureau's Current Population Survey. The largest share — just under 23% — has incomes between $10,000 and $19,999.
Many Americans hoping to age out of work may also not have retirement accounts to fall back on, or to use as a cushion. In the Federal Reserve's Survey of Consumer Finances, just 42% of Americans 75 and older reported holding retirement accounts as of 2022. Similarly, only 51% of Americans 65 to 74 said they held retirement accounts.
And, as Sanders' report said, about 10% of older Americans live in poverty, an analysis from the Center on Budget and Policy Priorities found. Without Social Security income, about 38% of Americans 65 and older would be living below the poverty line. Even so, America's Social Security benefits lag programs of many other wealthy countries; benefits amount to, on average, 51.8% of workers' earnings across the Organization for Economic Co-operation and Development member countries. In the US, they fall under 40%.
Among G7 countries — a group of wealthy, industrialized democracies — the US trails Japan only slightly when it comes to elder poverty rates, defined by the OECD as making less than half a country's median income.
Some lawmakers, including Sanders, have proposed legislative solutions, such as beefing up Social Security checks, setting up kids with automatic savings accounts, or automatically setting up retirement accounts for lower- and middle-income Americans whose workplaces might not offer them.
All that comes as older Americans see their adult children leaning on them financially and Gen Zers and millennials weather their own economic storms.
"I'm really expecting the landscape of the economy for this generation that my children are in to be dismal," Jane, a boomer who unretired to help support her Gen Z kids, previously told BI.
Are you struggling to retire or worried you'll never be able to retire? Contact this reporter at [email protected].