Data from the Center For Retirement Research shows an alarming trend in wealth accumulation and retirement preparedness among Americans. The chart, which contains data going back to 1983, shows a stable pattern of wealth accumulation through the most recent survey in 2010. In 2010, accumulation of wealth dropped among most age groups due to the severe recession and unemployment crisis. The CRR suggests that even if the ratio of wealth to income returns to its historical norm, the fact that funding retirement is significantly more expensive than it used to be, means trouble for future retirees. In short, the CRR warns prospective retirees that having the same amount of assets as your parents won’t be enough to handle the rising costs of retirement. More here.
New data from the Center for Retirement Research at Boston College shows the pattern of wealth accumulation has remained virtually the same since 1983. That means, though expenses and life expectancies have gone up, people have approximately the same assets going into retirement that they had in 1983. In addition, the most recent recession has taken a staggering toll on the preparedness of baby boomers heading into retirement. Losses experienced in the real estate and stock markets were compounded by the need to dip into retirement savings to make up for the financial burden. These changes to the wealth-to-income ratio, which is a good predictor of how much income someone can replace once they retire, suggest that Americans have become increasingly less prepared for retirement over the past 30 years. More here and here.
According to a new AARP report, 80 percent of baby boomers who were unemployed in 2010 were still out of work late last year. The report, which surveyed boomers on their financial well being following the recent recession, discovered that Americans between the ages of 50 and 64 continued to struggle three years after the official end of the recession. Because older workers have less time to recover from a job loss, the recession was particularly difficult for salaried employees in their 50s and 60s. Even among those who were able to find work, less than half said they were back on track financially because of lost savings or having to take a job for less money. The survey’s findings highlight the economic struggle felt by millions of baby boomers whose retirement plans were changed or altered by the recent recession. More here and here.
According to Census Bureau figures, there will be approximately 10,000 people turning 65 every day until nearly 2030. And, with the number of senior citizens rising rapidly, so will the number of cost-burdened senior households. According to the most recent American Community Survey, 42 million households pay more than 30 percent of their income for housing and 20.2 million pay more than half. Unfortunately, older Americans are especially vulnerable to these financial struggles. In fact, the number of older households with severe housing cost burdens jumped by one million between the years 2001 and 2010. Adding to the likelihood of a continued spike in burdened senior households, the recent recession led to a $14.3 trillion drop in net household wealth at the same time the number of older homeowners with mortgages has been increasing. From 1999 to 2009, the share of homeowners over the age of 65 with mortgages increased 11 percent. More here and here.
Between 2005 and 2010, median household net worth dropped 35 percent, according to figures released by the Census Bureau. The decrease, due largely to the loss of housing and stock values during the recent recession, hit older Americans particularly hard. Median net worth for householders 65 and older, dropped from $195,890 in 2005 to $170,128 in 2010. The loss, in absolute terms, was greater than any other age group and among the reasons for an uptick in delayed retirement plans. However, when measured by percentage of total net worth, seniors experienced a 13 percent drop in net worth while individuals under the age of 35 lost 37 percent and people between the ages of 35 and 44 lost 59 percent of their net worth. Excluding home equity, median household net worth increased 8.0 percent between 2009 and 2010. More here.
According to new research from the University of Michigan’s Institute for Social Research, 40 percent of Americans over the age of 50 postponed their retirement following the most recent recession. Brooke Helppie McFall, an economist at the Institute for Social Research, said the typical household lost five percent of its total wealth during the recession and, in order to make up for their loss, the average person would need to work an additional five years. But despite losses in stock and housing wealth as well as savings and retirement accounts, few Americans planned to work long enough to cover the total amount of their losses. Among those postponing retirement, the average person planned to work an additional 1.6 years. More here.
After hitting a record high in 2009, new social-security claims have fallen the past two years. In 2009, 3.2 million Americans over the age of 62 began collecting social security. In 2010, that number fell to 3.1 million and last year it dropped to 3 million. The downward trend in social-security claimants is partly due to a stronger economic environment and labor market, along with the incentive to delay claiming to boost benefits. The analysis, from the Urban Institute, found that 31 percent of eligible people registered for social security in 2009 and, by 2011, that percentage dropped to 26.9 percent. Richard Johnson, a senior fellow and director of retirement policy for the Urban Institute, wrote in the report that the trend toward delayed claiming that began around 2000 seems to have resumed after a spike in claimants during the recent recession. More here.
Despite conventional wisdom on the topic, a new survey finds that baby boomers are retiring in large numbers. The study found that 59 percent of boomers who have turned 65 are already, at least, partially retired. Among respondents, 45 percent are completely retired and 14 percent are working part-time. Half of the participants said they retired earlier than they had expected to and 43 percent said they are optimistic for the future. The study’s findings are contrary to many reports claiming the recent recession had baby boomers unprepared for retirement and expecting to work well beyond age 65. According to this study, however, the average age of retirement for boomers born in 1946 is 59.7 for men and 57.2 for women. More here.
A recent survey conducted by the National Council on Aging found a 15 percent increase in the number of prospective reverse mortgage candidates between the ages of 62 and 64 over the past 13 years. And though the average age of individuals interested in a reverse mortgage is 71.5, the recent recession has increased anxiety about retirement and shaken seniors’ financial confidence, which may contribute to the increasing numbers of interested boomers below the age of 65. Barbara Stucki, Ph.D., vice president of home equity initiatives for NCOA, said that reverse mortgages will likely become part of the entire retirement planning process in the future, alongside more traditional methods of saving and investing. Reverse mortgages allow individuals over the age of 62 to draw on their home equity without monthly mortgage repayments. More here and here.
Despite recent signs of economic improvement, Americans over the age of 50 are generally pessimistic about their financial situation, retirement, and ability to find a job. More than 1,300 Americans over the age of 50 were surveyed recently by the AARP and, according to the results, nearly half of them expect their standard of living in retirement to be worse than their parents or grandparents’ generation and 72 percent said they weren’t confident they’d be able to find a job if they needed work. The recent recession has spiked financial fears for those nearing retirement and people who have already retired. Among respondents, 57 percent said the recession has made them less optimistic that they’ll have enough money to live comfortably during retirement. Government gridlock ranked highest on the list of things participants reported being very worried about. Rising taxes, high inflation, and having enough money for health care also made the list. More here.