Pandemic to Force Millions of Retirees into Poverty: Report – 401K Specialist Pessimism abounds.

What is reported in the study is not only unnecessary, but silly and inaccurate.

Why? Well, unemployment caused by the pandemic is temporary for most workers as is the decline in the stock market.

Most older workers (age 50+) will have time to financially recover. Even if a person just retired and saw a significant drop in their investments, those investments are not consumed all at once, typically 4% per year. The big hit they may have taken in market loss has minimal impact in the short term and even less impact in the long term. In fact, for those still saving for retirement there is an investment opportunity.

A blip in the stock market, even a recession, is not going to cause “high-earning” households (income above $137,700) to fall into poverty, unless they are exceedingly unprepared, shortsighted or just stupid.

“The report claimed all 67 million older workers will see a 7% to 9% percentage point drop in their retirement replacement rates. The numbers show “that middle-class workers are hit by both market loss and job loss, while some high earners will experience dramatic falls into poverty.”

Major findings

  • Low-earning older workers are more likely to be unemployed in the pandemic’s aftermath. While a large majority were likely to be poor in retirement before the recession, the COVID-19 fallout will push an additional 1 million people from this group into poverty.

  • Middle earners sustain both job loss and market loss, leading to an additional 1.1 million older workers falling from the middle class into poverty.

  • High-earning older households are a small group, but their retirement is likely to take a bigger hit from market losses. The recession will double the number expected to experience downward mobility into poverty in retirement from 360,000 to 720,000 people.”

Source: Pandemic to Force Millions of Retirees into Poverty: Report – 401K Specialist

That last claim for high earning households is absurd. A couple with one income at $137,000 retiring in 2020 at age 66 will have a Social Security income alone of $46,476 per year using the Social Security Quick Calculator. That’s not a fully adequate income replacement for most people, but is sure isn’t falling into poverty either.

Here’s the counter view. Are retirees really doomed financially?

NOT TO DIMINISH the severity of recent coronavirus-fueled market events, but it’s not exactly news to note the confusion caused by sensational claims made by the mass media. A lack of accountability and desire for clicks is fueling a frenzy of irresponsible narratives.

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