Retirement Remains a Far-Fetched Idea for Many Americans
Truth be told, for many Americans, retirement seems like a far-fetched idea. Sadly, it could get worse.
You see, the statement above is not based on a gut feeling. There’s data that supports this.
Consider the recent report by the Transamerica Center for Retirement Studies. The report states that just 18% of the workers in the U.S. are confident that they will be able to fully retire and live a comfortable life. This means 82% of Americans aren’t confident in retiring comfortably.
In the same report, it said 53% of workers in the U.S. expect to retire after the age of 65 or don’t plan to retire at all.
Why? 83% of them said it was due to financial-related reasons.
“At a time in which healthcare, education, and housing costs are soaring but real wages have not caught up, millions of Americans are facing strong financial headwinds,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. (Source: “Wishful Thinking or Within Reach? How Workers Are Preparing for “Retirement,” Transamerica Center for Retirement Studies, December 13, 2017.)
What’s worse, workers that saved for retirement are taking money away from it. According to the report, 29% of Americans have dipped into their retirement accounts.
“Many workers are not saving enough to amass the financial resources required to support their vision of retirement, while others are at risk of poverty,” Collinson added. (Source: Ibid.)
Mind you it’s not just this study saying Americans are struggling with retirement and retirement savings. There are several others that say the exact same.
Pension Crisis Looms
The problem is that retirement could even become a bigger worry. There are several things happening that continue to get ignored by the mainstream.
First, there’s a pension crisis happening. Pension funds from cities and states across the U.S. don’t have enough money to pay those who have retired or about to retire. Some have cut benefits for retirees.
Companies are facing similar problems, and they are taking even harsher steps. For instance, consider Arconic Inc (NYSE:ARNC), a specialty metals maker. Just recently it said it would freeze defined benefit pension plans for 7,900 U.S. employees. (Source: “Arconic to freeze pension plans for 7,900 U.S. employees,” Reuters, January 8, 2018.)
You see, it’s not just companies like Arconic that have done this. We have seen similar actions taken by major companies as well. It wasn’t too long ago when Boeing Co (NYSE:BA) froze the pensions of a massive number of its employees.
Could a Stock Market Crash Make Things Worse?
Beyond this, understand that stocks have performed exceptionally well since the financial crisis of 2008-2009.
Now we see valuations through the roof and well beyond their historical averages. With this, one has to wonder if there could be a stock market crash sooner than later. It’s very possible.
If there is a stock market crash, those who were lucky enough to buy at the bottom in 2009 might find their wealth disappear. Their retirement could be in trouble as well.
Dear reader, with time, we will definitely know more. But in the meantime, those looking to save for or are near retirement have to be very careful and use caution.