A generation or two ago, most retirees relied on a pension and some Social Security to survive a decade or two without work. A lagging economy, rising costs of living, and the virtual end of pensions means that many retirees are struggling to make ends meet. Don’t become one of them. The following retirement statistics might shock you—and encourage you to double down on retirement savings.
Retirement Age and Length
The average American retires at 63, with an average retirement length of 18 years. Many people of retirement age continue working well past 65. In 2016, 18.8% of people over 65 held a job. That’s up from 12.8% in 2000. This is a greater portion of working retirement age Americans than before the 1960s, when Medicare began providing a safety net to seniors.
With an aging population, more and more people are retiring. About 3.6 million people retire each year—or 10,000 each day. No wonder the Social Security trust fund is rapidly dwindling. Though retirement can be tough, in 2000, more than half of retirees said they found the transition very satisfying.
Inadequate Retirement Savings
Saving for retirement is hard—so hard, in fact, that 45% of all Americans, including 40% of Baby Boomers, have no retirement savings at all. Americans save just 4% of their income on average, compared to 8% in the 1980s. That’s well below the recommended rate of 10%, and for most Americans, will not be sufficient to fund a comfortable retirement.
About a third of seniors still owe money on their mortgages. That figure is rising, along with the total senior debt load. Worse still, most seniors simply don’t have enough money to retire. Seniors who expect a monthly retirement income of about $5,000 need slightly more than $1,000,000 saved. But the average fifty-something has less than $50,000 in retirement savings.
The Financial Perils of Retirement
You’ve spent your entire life working for income. Hitting a magic age—60, 65, even 70—doesn’t necessarily mean you’ll be able to survive without work. Many seniors continue to struggle with financial issues in retirement. Poverty is growing among seniors. In 2013, half of people on Medicare had incomes of less than $23,500.
Remaining Active is Key to Health in Retirement
Stereotypes of retirees involve rocking chairs, endless sitcom reruns, and a quiet existence. The reality is that seniors who remain active in retirement fare much better. People who remain active in retirement have fewer memory problems. That could also mean fewer expenses, since memory loss demands expensive and costly care. Remaining active can also reduce the rate of disability, and benefits even seniors in their 70s and 80s.
Of course, if you’re struggling to cover basic necessities, remaining active is no small feat. Your health may depend on a membership in an athletic club, keeping your car, or traveling to see relatives. A reverse mortgage is one way to fund these expenses. Open to seniors who own their homes and who are over the age of 62, reverse mortgages offer cash that you don’t have to repay as long as you remain in your home. The amount you can borrow depends on your home’s equity and some other factors, so consider talking to a financial advisor to explore whether this option is right for you.