In theory, retirement is supposed to offer a chance to relax, to spend more time with family and friends, and pursue new interests and hobbies. But real life doesn’t always work out like theory, in this case because many retirees are financially pressured and need more income to make ends meet. Social Security is helpful, but not enough to enable recipients to pay all of their bills. So, to paraphrase the Yiddish expression: How does the cat get over the water?
A survey cited by The Economic Collapse Blog notes that “85% of U.S. adults consider inflation one of the most important political issues, and notes that seniors are being hit particularly hard.” Another survey, this one published by the Motley Fool, found that 44% of retirees are considering returning to work because they need more money to survive.
Only A Partial Solution
The following statistic gives an idea how much the retired community has been impacted by high inflation. The Social Security Administration reports that their average monthly payment in 2024 is $1,907. But this amount doesn’t even come close to the $4,818 that people 65 and older spent each month in 2022, and that number has certainly increased since then. How should recipients come up with the rest? That’s a very good question, and one that may become a major campaign issue in the coming months.
Incidentally, retirees are not the only ones facing a crisis. Gen X, the group that follows the Baby Boomers and precedes Millennials, refers to people born between the mid-1960s and 1980. Some of them are doing quite well, but many others are not. According to Forbes, their median household has only $40,000 in retirement savings, and some are approaching retirement age quickly. Their limited savings is a major red flag in their retirement plans
Bad Time For Inflation
According to The Economic Collapse Blog, “The typical U.S. household needed $227 more in March 2024 to purchase the same goods and services it did one year before because of still-high inflation.” And they are paying on average $784 more than at the same time two years ago, and $1,069 more than three years ago.
Economists say that bringing government spending under control would help slow the rise in inflation, but don’t expect that to happen any time soon because the national debt is so high and rising sharply. Did you know that the government is now spending more than a trillion dollars a year just to pay the interest on the national debt? That’s more than its spending on national defense. And those interest payments will increase as the debt grows.
“When it comes to retirement, the data indicate that Americans’ worries are justified,” Forbes writes. “The reality is that retirement security is out of reach for far too many Americans. Most Americans, particularly middle-class workers, are falling far short when it comes to saving enough money for a financially secure retirement.”
According to the National Retirement Risk Index, half of US households will not be able to maintain their standard of living when they retire, even if they were to work until age 65.
Fox Business News says Social Security was never intended to be an individual’s sole source of income in retirement. However, about 27% of Americans rely on it as their only source of income, which gives an indication of how strapped for cash they are – and this at a time when interest rates are up sharply in the last three and a half years, as are groceries, rent, and gasoline, among other necessities.
If a retiree we know is forced to go back to work, we would likely feel sorry for that individual. But in a sense, this individual is fortunate, because it’s hard for anyone to get a job in this economy - and even more so for a retiree. Presumably, the job offered enough incentive to make going back to work worthwhile, and he or she avoided becoming a victim of age discrimination, an issue often swept under the rug, but one that is nevertheless very real.
Although the rate of inflation is slowing, it’s still above the Fed’s target rate, which means that both consumers and businesses still can’t breathe a sigh of relief.
The combination of these pressures has created gloom and pessimism. A survey published by Nationwide found that 19% of respondents doubt that they will ever be able to save enough money to retire. On a related note, over two-fifths of Baby Boomers nearing retirement have no retirement savings.
On the bottom line, everyone who doesn’t have access to a large checkbook should be especially careful about saving money for their retirement now and not push off plans to save.
Doing What’s Necessary
Paying off all debt or at least paying it down is very important; so is belt-tightening, although this is not an easy decision to make, especially for people who have already cut their spending. Still, they’ll need to do what’s necessary to cope with the pressures of the times.
For example, some financially-pressed individuals take the dollar bills and the change they get when shopping and put it aside. After a few weeks, they invest those funds in an account that pays interest. Granted, this is a “build a nest egg for retirement very slowly” approach, but even a very small nest egg is better than none at all.
According to Business Insider, “Despite holding more than half of the nation’s wealth, many boomers don’t have enough money to cover the costs of long-term care, and 43% of 55- to 64-year-olds had no retirement savings at all in 2022.”
It’s advisable to speak with a reliable financial advisor. He or she may have some suggestions many people are completely unaware of that could be very helpful in their particular circumstances. The sooner this is done, the better.
Sources: businessinsider.com; forbes.com; foxbusiness.com; theeconomiccollapseblog.com; thefool.com; wikipedia.org; yahoofinance.com; zerohedge.com
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
