It’s a wonderful thing that people are living longer these days thanks to modern medicine. More people are living past their 80s than ever before. While physical health is improving, it’s taking a toll on our financial well-being.
Fewer companies are helping their workers save for retirement, and because we’re living longer than expected, it’s leaving us to wonder how we will be able to fund the entirety of our retirement.
In a lot of cases, we won’t be able to. It’s as simple as that. And it’s devastating to those who are ready to enter that golden age of their lives, but have to keep working because they simply can’t afford to retire.
It’s not just having the money, either. The typical American workforce is changing, thanks to economic disasters that have pulled people out of the factories and on the computer.
Right now, 33% of our workers are freelancers, a number that is growing significantly with each passing year. 16% of these freelancers plan to keep working past retirement age because they simply won’t be able to afford life otherwise.
80% say debt is the number one reason why they’re not saving.
John Stein, CEO of Betterment, believes Americans need to find a new retirement strategy.
“The emergence of the gig economy has changed the American workforce. And the way we save for retirement needs to change with it,” he said.
Of course, this isn’t just for U.S. freelancers, but for workers around the world. Nearly half of all workers and retirees alike believe that the next generation of workers will have it much worse than they do.
Work-sponsored benefits are disappearing. Social Security is dwindling. And extreme levels of the debt, the highest we’ve ever seen, make it impossible for workers to afford their own retirement. It’s a perfect storm of frustration and fear for future workers who don’t want to work until they die.
Catherine Collinson, the CEO at Transamerica, is watching all of this unfold. She says:
“People are living longer than any time in history and birthrates are declining. Employers have been replacing traditional defined benefit pension plans with employee-funded defined contribution retirement plans. Today, individuals are expected to take on increasing risk and responsibility in self-funding a greater portion of their retirement income.”
35% of Americans are considering investing in the stock market, but nearly half worry about an incoming recession and market volatility. Really, all options are seemingly falling apart.
The average amount needed to safely retire on is between $1 million and $1.5 million, which is usually earned over the lifetime of a career. But now, there are plenty of 30 and 40-year-olds who haven’t even been able to save a penny and are racked with so much debt it’s hard to breathe.
In fact, 1-in-3 of U.S. citizens have nothing saved. According to a CNN survey, 56% of us have less than $10,000 saved. Only 13% have more than $300,000. This is showing a huge discrepancy between need and ability to save. It’s particularly difficult for women, as they are less prepared than men and live longer on average.
The best way to conquer this is to save money as if you’re retiring tomorrow. Because of the debt situation, retirement isn’t as much of a priority to Americans and it shouldn’t be that way, especially as you get older. Do whatever you have to do, even if that means you put in extra hours doing freelance to get there.
