When you think of “the working poor,” you might imagine a single mother just scraping by to put food on the table for her kids. It’s time to broaden that image. Give that single mother some gray hair and add a few wrinkles. An article written by Alana Semuels and published in the Atlantic paints a disturbing picture of the retirement landscape for older Americans. In the article, titled “This Is What Life Without Retirement Savings Looks Like,” Semuels gives us a stark look at a growing problem as Baby Boomers enter their retirement years without savings.
Three Pillars Down to One
In the article, Semuels explains that traditional retirement typically depends on three pillars:
- Social Security
- Employer-sponsored retirement plans
- Personal savings
Pensions are rapidly disappearing, and most small employers do not offer retirement plans to their workers. Many Americans spend their life hopping from one low-wage job to another, never having access to employer retirement plans and the lucrative savings matches that higher-skilled workers enjoy.
Additionally, these same people struggle just to keep food on the table and bills paid, leaving little left to save for retirement. According to the Census Bureau, a staggering two-thirds of Americans don’t contribute to any retirement vehicle.
That leaves only Social Security as a single pillar protecting seniors from destitution. Ironically, the people who need this help the most are the ones who are the most likely to have low earnings throughout their lives, which will leave them with a smaller Social Security check each month. Women are especially vulnerable. They live longer, earn less, and often take years off work to raise children. One woman featured in Semuels’s article receives just $778 a month in Social Security, which must cover her $600-a-month rent and all of her monthly expenses.
Up to 10,000 Baby Boomers turn 65 each day. According to the article more and more of them are discovering that retirement is an impossible dream. According to the Census Bureau’s Supplemental Poverty Measure, 14.5% of people over 65 lived in poverty in 2016.
As a result, roughly 12% of adults over 65 are still in the workforce, earning money to supplement their Social Security. Many have no savings to rely on and no hope of ever kicking up their feet and enjoying an easy retirement.
What Are Your Retirement Plans?
Alana Semuels’s article is disturbing and depressing, but it’s also a stark reminder that relying on Social Security alone to keep you afloat after you turn 65 is a dangerous plan. It’s never too late to begin saving for retirement. Even putting away as little as $25 a month to start can help you create the habit of saving. If your employer doesn’t offer a 401(k) plan, you can establish your own IRA with many different investment companies. Set up money to be automatically withdrawn from your account so you don’t miss it and then increase the amount every time you get a raise at work.
It’s important to advocate for seniors in dire financial need, but first advocate for yourself by making smart retirement decisions today! A great way to start is to form a Money Club with a few friends who also want to improve their financial lives.