Observations on life

There is a 50% chance you won’t be able to maintain your standard of living in retirement | HumbleDollar

A Federal Reserve study found that 44% of Americans either couldn’t cover a $400 financial emergency or, to do so, would need to borrow or sell something. Among households headed by someone age 55 and older, 29% have neither retirement account savings nor a defined benefit pension plan, according to a 2015 Government Accountability Office study.

But perhaps the most revealing indicator is this: 50% of Americans are at risk of failing to maintain their standard of living once they retire, according to Boston College’s Center for Retirement Research. This assumes that, once retired, Americans will generate income by taking out reverse mortgages and purchasing income annuities—something few do. In other words, the portion of the population at risk of a belt-tightening retirement is likely much higher than 50%.

Source: The Other Half – HumbleDollar

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3 replies »

  1. I am really surprised that only 50% of Americans are at risk of failing to maintain their standard of living once they retire. To me, the term of “standard of living” means that you are able to spend money on the same things on your last day of employment as on the first day of retirement (other than simplifying your life). 44% already cannot cover a $400 emergency.I find it hard to believe that the remaining 6% were just poor retirement planners and savers.

    Almost all of us are one medical crisis from a medical bankruptcy even with insurance or medicare. I cannot afford long-term healthcare insurance. It is sad to say but it used to be a bout with cancer was short and then you died, hopefully you had life insurance and the surviving spouse could pay off the debt and live a normal life for another decade or two. Now after some very expensive treatments, you may need long term care or treatments draining your financial resources before you get a chance to collect that life insurance. Lucky some life insurance have provisions for early payouts. I wonder how many have life insurance at all?

    So if 44% can’t pay $400 for emergency now, then how many people cannot pay an additional $2000 per year in co-pays or drugs without having to give up somethings? I am not saying that the taxpayer or that social security should make up the difference, because they shouldn’t, I am just saying that I am surprised that 50% are not at risk and would be okay.

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    • Dwayne, I can understand why 50% are at risk. 50% of workers make less than $30,000 per year. I saved nothing for retirement and even if I had saved 10% it would of equaled $40,000, most of that would of been saved the last 15 years of work. But I knew that I would not make it on SS alone, so I served 20 years in the USAF for the retirement check. When I first started working I made $1.85 per hour and my highest was $12.40 per hour in 1995.
      The welfare system is a joke – my 88 year old mother with $800 SS income receives $93 per month food stamps. My brothers girlfriend made exactly $351 extra one month working extra shifts and their $351 food stamps were cut to zero, how is that helping?. How she made exactly $351 extra was never answered by the welfare folks. They need to close all the welfare offices and save the money and add those dollars to the earned income tax credit. Too many of our programs to help people are just a jobs program for those lucky enough to get a job at the local welfare office. In 2015 I applied for assistance and with $1600 per month income just me and my wife and was told I had $50 per month too much income to get food stamps. They also told me if I had $100 in medical costs, I could get $15 per month, CRAZY!
      Read my reply below and see some of the choices needed to make it anytime when you are low income and 50% of workers are low income workers. But you continue to hear from the rich talking heads, that minimum wage does not need to be raised. In my opinion the real push for Medicare 4 All, is so business will no longer have to provide healthcare benefits to their employees.

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  2. The best way to live well in retirement is have zero debt. No car payments, no house payment and never any credit card debt. We need to educate younger family and friends that the only thing to use credit for is a house or car, nothing else. I have not had a car payment since 1986 and have owned 12 different used cars, paying cash for each one.
    I also, have never owned more than one car at a time, you save the purchase price of the second car and on repairs and insurance.
    You have to learn to spend less in retirement. I only activate my 5 year old cell phone when I go on vacation. At home I have cable internet service with home phone for $36 per month and Hulu streaming with live TV service for $40 per month, saving me $35 vs cable TV.

    I did not even purchase a High def TV until 2014, a 40″ set for $269, until then I watched a Sanyo 27″ 1990 model that I purchased at a local pawn shop for $50 in 1997.

    I started SS at age 62 this year and with my USAF pension I now have more income each month $2961, than I had during my working years from 1971 to 2006 when i left the workforce at age 50.

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