Is retirement truly dead? Perhaps not, but it seems increasingly out of reach for the middle and lower classes. Once upon a time, an entire generation was able to count on the retirement golden trifecta: pensions, social security, and savings to see them through the twilight years of their lives.
These days, with pensions on the wane, it seems that U.S. adults are largely failing to step up their savings through 401ks and IRAs to compensate. As a result, the dream of retirement might be just that…nothing but a dream.
Americans Aren’t Preparing for Retirement
A survey by the Federal Reserve offered an unsettling view of just how unprepared Americans at all age levels are for retirement. According to the survey, which was conducted at the end of 2014, over a third of Americans have absolutely no retirement savings at all. That includes 25 percent of adults over the age of 45.
Most of us cannot hope to save an adequate amount for retirement without the help of compound interest, a powerful financial tool that requires early saving. When you start in your mid-twenties, you have 40 years to save, and with diligent effort, you will amass a reasonable retirement nest egg. At the age of 45, an individual with no savings who wants to retire at 65 would only have 20 years to save enough money to last the rest of their lives. For many of us, this would be a nearly impossible feat, especially if we are just trying to keep up with the bills and mortgage.
Americans Are Giving Up On Retirement
As a result, many Americans have given up on the possibility of retirement altogether. According to the Fed survey, 55 percent of respondents with a household income of $40,000 or less never plan to retire at all. Consider what this means. We are looking at a future that includes an entire class of working elderly. These seniors will be forced to stay in the workforce just to make ends meet even as they potentially struggle with health issues.
Someday soon, retirement may be considered something only the elite can enjoy, along with vacations in the Swiss Alps and their own yachts.
You do not have to give up on retirement, even if you don’t have a penny in savings yet. It is never too late (or too early) to start saving and planning, even if you can only save $5 a day. Please take some time to read through our great archive of retirement articles.