Your goal should be a relatively uniform standard of living from start to finish …

you can’t do that without planning for the future every day of your life and that may mean your working years standard of living must be adjusted.

Americans have been warned for years of an impending retirement crisis. Yet the situation is getting worse.

Even when everything was going right — inflation was nonexistent, interest rates were low and stocks were in an extended bull market — there was a multi-trillion dollar savings shortfall.

Then came a pandemic, war in Europe, decades-high inflation, the fastest rate-hiking cycle since the early 1980s and fears of a recession. The resulting market turmoil erased some $3.4 trillion from 401(k)s and IRAs in the first half of 2022, according to Alicia Munnell, director of Boston College’s Center for Retirement Research.

And that’s just for the people who have retirement accounts. About half of private-sector workers don’t have an employer-sponsored retirement plan, and many of those who do end up saving very little.

It’s a problem that isn’t easily fixed, and contributes to the sense that the American Dream is in decline. And while surging inflation and volatile markets are bad news for people in or nearing retirement, the picture may be even worse for young Americans who are priced out of the housing market, struggling to build wealth and buried under mountains of student-loan debt.

“Living standards are going to decline for a large portion of the population who are in retirement — that’s the concern,” said Richard Johnson, a retirement expert at the Urban Institute. “For people who are not in that age group, it’s still concerning because it could strain the social safety net.”

In 2019, Boston College estimated there was a $7.1 trillion retirement savings shortfall among American households, with half of them facing a lower standard of living once they stop working. That number likely hasn’t changed much since then, despite the increase in stock and housing prices over the last three years, according to Munnell.

SOURCE: Investment News


  1. I have to agree that the impending retirement crisis has been predicated for years and people seem to be doing as good or better than the doom and gloom warnings would have us believe.

    First, I think there are a lot of pensions out there. Military, teachers, government civilians, as well as some private pensions are operable. I personally know or am related to military pensioners as well as teachers and government workers. Also some private pensioners. Most are also getting Social Security. Add in the folks with investments other than stocks and bonds, such as rental houses, and small businesses and things look a lot better.
    Not saying that everyone is in this boat but a heck of a lot.

    A 25 year old worrying about retirement is a waste of time and mental effort.


    1. Actually only 4% of workers have a defined benefit pension plan down from 60% in the early 1980s. About 14% of companies offer a combination of both defined benefit and contribution types. Traditional pensions are only common in government.

      I have to disagree that a 25 year old shouldn’t worry about retirement. The sooner they start saving the easier it will be.


  2. OK, enough!

    What percentage of older Americans, age 65+ lived in poverty in the 1950’s, 1960’s, 1970’s, 1980’s, 1990’s, 2000’s, 2010’s, and today?

    Less each decade! Fact is, an ever smaller percentage of adults live in poverty, and retire into poverty.

    The sky is NOT falling on older Americans, at least when compared to the past!

    And, remember that poverty is an income measure, excluding wealth! If you measured poverty as a combination of income and accumulated wealth/possession, it would be even less.

    Finally, keep in mind that overall, equity assets have declined … to 2018-2019 levels. The run up to record levels and dump likely reflects all the stupid federal government infused liquidity.


    1. The article was about the individual managing one’s life and finances from start to finished. I don’t know about you, but I never wanted a retirement that just kept me above the poverty line or living on SS. Better question is what percentage of older Americans are able to sustain their pre retirement standard of living and not be forced to relocate, trim spending and such?


      1. The answer is … more Americans than ever before are able to sustain their pre-retirement standard of living, and not be forced to relocate, trip spending and such.

        The number of old people living in poverty is down, and declining. There is almost $30 Trillion out there in retirement savings, much more in other assets – most of it belongs to individuals ages 50+ (as it always has) – just more democratized than ever before. We now have almost 700,000 DC plans, with over 100MM participants. For comparison, back in 1975, the number of plans was 207,000, number of participants was 11 million and amount of assets was $74 Billion.

        I very much believe in the Modigliani life cycle hypothesis that people seek to maintain roughly the same level of consumption throughout their lifetimes by taking on debt or liquidating assets early and late in life (when their income is low) and saving during their prime earning years when their income is high. Modigliani himself once authored a concept about saving for retirement in a 401k and borrowing from that account as part of the life cycle.



        I have maintained a uniform standard of living, in the lower middle class for 48 years, since graduating high school. Never making more than $35,000 per year, average $15K. How did I do it? I learned very early that I could not afford to pay anyone to fix broken stuff. Car repair, Plumbing, Electrician skills, appliance repair, became my hobbies. I even made a few bucks fixing other’s broken stuff. The most important two letters in the alphabet are N and O. I told my 4 kids, wife and myself NO plenty of times, when we could not afford something extra. Savings for retirement was not in the picture, as I knew I would have SS and a USAF pension. Now with retirement income of $40,000, I am able to save 25% per year. I still tell myself and wife NO plenty of times, but get a big smile when I look at my account balances. I live in Montana, and that makes it very easy. No sales tax, $23 in state income tax. We have hydroelectric and natural gas, average monthly bill less than $100 for both. I buy maybe 2 tanks of gas per month, so my carbon footprint has to be one of the smallest. I just purchased the 2020 Ford Edge, that I had been leasing since new, at month 30 of the 36 month lease, to lock in a lower interest rate, now. Purchase price $21,762 on a 48 month loan @ 4.19%, $493.23 per month. It will be paid off way before 48 months. Things are not that bad for 80% of retirees, I know. As for the 20%, they have government programs that help greatly. My 65 year old brother manages to live well on $900 per month, home, car paid for and zero debt. He gets $600 per year to purchase fire wood and $80 per month food assistance. His Medicare premium and co-pays are covered by Medicaid. SS even with the coming shortfall is the best government program ever, that has kept millions of retirees out of poverty.


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