Are We Facing A Retirement Crisis?

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If you’re a Baby Boomer, you’re either retired or rapidly approaching retirement.

Are you ready?  

We’ve all heard about the “retirement crisis” many are confronting, but what are the facts?   I’ve been studying the numbers this week, and they’re concerning.  Today, I’ll present the facts and let you draw your own conclusion.

Are we facing a retirement crisis?

Today, a fact-based look at the retirement crisis many people are facing.  The numbers don't lie. Click To Tweet

Are We Facing A Retirement Crisis?

I learn a lot by reading studies, and the 19th Annual Retirement Survey of Workers conducted by the TransAmerica Center for Retirement Studies is no exception.  This 222-page beauty is worth a read, but I’ll save you some time.  Below are some of the key takeaways from the report, including some graphics I found interesting from the survey.  Today’s article will also draw from a report Investopedia wrote about the study.

What Are The Facts?

Is there a crisis, or isn’t there?  To me, the facts speak clearly, so I’ll let them talk:

  • $152,000

The average amount of money Baby Boomers have saved for retirement. 

Assuming a 4% withdrawal rate, the average savings of $152k supports only $6k per year of spending in retirement.  Tough to live on $500/month, and a demonstration of how dependent the average Baby Boomer will be on their monthly check from Social Security.  Unfortunately, 77% of workers are concerned about the viability of Social Security

Source: 19th Annual Transamerica Retirement Survey

  • 45%

The percentage of Baby Boomers who have nothing saved for retirement according to research from the Insured Retirement Institute.  It’s no wonder that almost half (48%) of those surveyed citing “outliving their savings” as their biggest retirement concern:

  • 43%

The percentage of Baby Boomers who carry credit card debt.  Throw in car loans and mortgages, and a full 78% of baby boomers are carrying debt as they prepare for retirement.


  • $48,885

The average annual spending of people between ages 65 – 74 according to the Bureau of Labor Statistics. 

Given the dismal retirement savings of many workers, their debt obligations and their distrust of Social Security, it’s no wonder that 78% of workers expect to retire at age 65 or later, with a full 14% never planning on retiring. The numbers are even worse for Baby Boomers, with 89% expected to retire at age 65 or later:

My biggest concern is that a majority of those who plan to work until a late age will likely face the reality that they may not have that luxury.  As I wrote in Will You Be Forced To Retire Early, a full 60% of people are forced into retirement at a younger age than they had planned.  COVID-19 has only made the situation worse, with Baby Boomers now delaying their retirements due to the Coronavirus (according to this Money article).  Fear is increasing, with workers in April saying there was a 20.9% chance, on average, that they could lose their job in the next 12 months, according to a recent New York Fed Survey.  

In spite of the risks, a full 62% of workers do not have a backup plan for income if they’re unable to work.

Consider the realities of…

  • Wage stagflation (which have hampered ability to increase savings as folks near retirement),
  • Low-interest rates (which have hampered returns on portfolios),
  • Unemployment trigger by the COVID-19 crisis (which have hampered incomes),

…and it’s clear that many people will face a very real retirement crisis. 

Finally, it’s worth asking if things are more difficult today than previous generations.  Do we have it tougher than our parents?  It certainly seems to be the case, with the following percentage of responses believing that their generation will have a much harder time achieving financial security in retirement:

  • Baby Boomers:  69%
  • Millennials: 79%
  • Gen X’ers: 81%


So…are we facing a retirement crisis? 

By looking objectively at the facts, we can each draw our own conclusions.  Personally, I think our society is facing a crisis that is larger than currently recognized by the culture at large.  I worry deeply about the millions of people who will be unable to retire and yet face the very real risk of having trouble staying in the workforce.  My heart goes out to them, but I fear for many it’s already too late.

Even those who have positioned themselves well for retirement (which, in all likelihood, includes the majority of readers of this blog), it’s a fair warning to be prepared for potential government response as the extent of the problem becomes clear in the coming years.  In my case, we’re using only 75% of our “promised” social security income in our retirement cash flow forecast, and I’m doing annual Roth conversions to take advantage of historically low income-tax rates while they last.  We can’t control the action of those who are unprepared, but we should consider steps we can take to minimize the potential impacts that could result as the retirement crisis becomes more visible.

PS – I just got an email from Jeremy @ with a great link to their May 2020 Simplywise Retirement Confidence Index.  GREAT content, I wish I’d seen it before I wrote this post.  Worth a read if this topic interests you… 

Your Turn:  Do you think our society is facing a retirement crisis?  What are you doing to protect yourself?


  1. This study really hits me with information I kind of already know – We have a big spending generation that just isn’t prepared for retirement. I think this is the first big wave of an “immediate gratification” generation. Want something? Get a loan. Get a credit card. Get a mortgage.

    Do you have any thoughts around people in this generation taking social security early even when they shouldn’t? That’s the biggest concern for both my inlaws (MIL took it at 62 even though she didn’t need it) and my mom is counting down the days until she can take it at 62, just to “have some extra fun money”, even though she needs to wait as long as possible. In both of those cases even allowing an early option is going to cause a lot of pain for them if they live into their mid 70s and their ability to work stops.

    1. Robert, I agree the data helps put the facts behind a cultural phenomenon we’re all familiar with, but I find it interesting to see the actual data behind the trend. Concerning to say the least.

      I have read some data on the % of folks who take SS at the earliest possible date. As you’d expect, it’s the majority of folks (shocking to me, but true). Fortunately, the trend has been declining a bit as more people learn about the concept of longevity risk and the fact that delaying SS is one of the best tools you have available, if you can afford to wait. Unfortunately, many folks can’t afford to wait, as the data above points out. Others worry about the longer term viability of SS, so they figure they better get it while they can. I’ll be delaying as long as possible, we can only control ourselves and not the decisions of others, right?

      PS – I hope that shirt isn’t ironed in your pic. Wink. Thanks for stopping by.

    2. Robert, you have a very valid concern. Both of my parents retired in their late 50s/early 60s and while both had nest eggs, they both filed for SS at age 62. In later years both complained that the COLAs didn’t keep up with cost of living increases in the real world… and my father went broke 4 years ago. Only had his SS and filed for food stamps after his wife died and he no longer had her SS income in his household.

      It’s not good to outlive your money. Both of my parents are still alive at ages 87 and 88. Both have outlived their parents’ ages. So we all need to plan as if we will outlive our parents’ ages too.

  2. Yikes, those numbers are bleak and if accurate I’d say it’s a crisis for sure. One thing you didn’t mention is that even if they want to keep working into their 60’s or 70’s or if they try to retire and find out they have to go back to work – age discrimination is a very real and very common thing. And there aren’t enough Walmart greeter positions out there to fill that need.

    1. 7:49 am!? Gees, Dave, the COVID thing is turning you into a procrastinator! I can’t believe you let Robert beat you to the worm this morning. Smiles.

      I totally agree with your point about age discrimination, I’m sure it’s a factor behind the “60% retire earlier than they had planned” cited as my biggest concern when looking at the data. There’s an ~80 year old woman who works the drive-thru window at our local Wendy’s, and I wonder what her story is on the rare occassion that we pass through. Sad if she’s having to do it for money, and I sincerely hope she’s just doing it for the social interaction. A sign of things to come for many baby boomers, I’m afraid.

  3. Fritz, the numbers “don’t lie”. It’s worrisome…and even though I’m in better shape than “average”, I sometimes wonder if it will be enough.

    Good article

    1. I think we all wonder about that, pd, especially as we finalize our decision on when to retire. At least we’re paying attention, and know what questions to ask. BTW, have you decided when to retire yet? Wink. Hope to see you up here in the mountains soon, I’ll meet you at the airport and take you to lunch (I think it’s my turn to treat?), lmk when you’re good to go and we’ll make it happen.

  4. Thus study does not include pension plans which can be considerable for a number of retirees.

    1. Fair point, Dr J, but unfortunately an asset that fewer and fewer people have access to (latest numbers I’ve seen state only 17% of private sector companies now offer defined benefit pensions). It would be interesting to see the statistics for the various demographic groups, and I wish this survey included questions about pensions.

      1. It seems to me that the number of underfunded public retirement plans is another element that increases the threat of the government taking drastic action that will hurt those who have prepared.

  5. Possibly worst of all, most of this “crisis” was of our own creation. Gone are the frugal habits learned by survivors of the great depression.

    1. No doubt, our culture of immediate gratification and materialism will cost many. Our lives are influenced by our decisons, it’s unfortunate that many folks don’t realize the relationship until it’s late in the game.

    2. Yes Steve, completely agree. Most all of my friends (in their 50’s) are broke, not poor, due to overspending or poor planning. They did not learn from the last financial crisis. It’s too bad. Worst part for us is that we will have no one to hang out with or travel with when we retire in our early 60’s (barring another market collapse) unless we find new friends. I have tried to drop hints on what they need to do, but no one listens or seem to care. I’m not wealthy, but they see us buy big ticket items with cash and never ask what we are doing right with our finances to afford certain luxuries. Oh well.

      1. OMG…I feel the exact same way!!! I tell my husband all the time that we need to find new friends as we will retire very soon and our friends are a decade behind. And they are strong consumers!!

  6. The survey data itself is a little dated since it was conducted between Oct-Dec of 2018 and obviously things are a lot different today so I would think if the same people were surveyed today or a couple of months ago the results would be worse. There were 5,168 people surveyed and 42% were Millennials, 29% were Gen X, and 29% Baby Boomers. Since it’s weighted more heavily towards Millennials than I’m not surprised by the results since it’s the same generation weighed down with student debt.

    Overall, I’m not surprised that people are not ready for retirement, any time there is a “crisis”, the first thing you hear is people can’t pay next month’s rent as they are living paycheck to paycheck. I never wanted that feeling in my life growing up so we just spent less than we made and saved. I’m now 55 and unemployed due to management reorganization/cost cuts and while it’s not an ideal situation to be in at this stage in your life we still have retirement funds that put us in a good spot. While I’m still looking for FT corporate work, I’m happy to work PT for an hourly wage and medical benefits in the meantime.

    1. “I never wanted that feeling in my life growing up so we just spent less than we made and saved.”

      You make it sound easy, Bob. Simple, perhaps, but definitely not easy (as proven by the small percentage of people who actually do it). Congrats on being responsible, it sounds like it’s serving you well in your current situation. Good luck finding that FT work, and congrats on having the medical in the meantime!

  7. Most people end up with the retirement they planned for. That is, as Ben Franklin would say, people don’t plan to fail, they fail to plan.

    Those who reach retirement ages with no accumulated savings are the same folks who had other priorities prior to retirement. A 25 year old in 1982 (39 years ago) who had retirement preparation as a priority could have funded an IRA, and if she achieved a 5% per year rate of return, that accumulated asset, when combined with Social Security, would have generated an adequate income replacement upon her reaching retirement at her SSNRA. See: and and

    Today, the percentage of age 65+ Americans living in poverty has dramatically declined (from 30+% to < 5%). Just as important, the Society of Actuaries and other studies confirm that many individuals are finding a way to live within their means during retirement – at least over the past 20+ years. In fact, children are much more likely to be living in poverty, and post-COVID-19, many of their parents, as well.

    Bottom line, today's workers largest concern, in terms of retirement preparation, is, was, and should continue to be the 535+1 spendthrifts inside the Beltway. As I always say, pension promises without funding are mere dreams!

    1. Today, the percentage of age 65+ Americans living in poverty has dramatically declined (from 30+% to < 5%).

      Wow, that’s some interesting data to add to the discussion! Thanks for the great content and worthwhile links. I think many governments large and small have over-commited on the pension promises, definitely another element in the “retirement crisis” when folks get their pensions cut in the coming years. I’ve no doubt it will happen, and I’d be very concerned if I were depending on a municipal pension from many cities as the sole means of funding my retirement. Thanks for adding value to the discussion.

  8. Yes – this data is not surprising but outlines a terrible situation for many. The sad part is that through the years most people tried to keep up with the Jones’s. Now that the Golden Years are around the corner many have little to be happy about. The burden will land somewhere and have a larger impact on the next group reaching retirement.

    For me, if I could get insurance at a decent rate – I would retire tomorrow. I have some health issues that companies will not underwrite me and the exchange is much to expensive. Hoping for health care changes in the near future.

    1. You’re not alone in hoping for health care changes. I’m not too confident that it will get resolved anytime soon, however. And yes, those folks who were chasing the Jones’s are starting to have to face the reality of those decisions earlier in life.

  9. I feel like we’re in a game where they continually up the ante. There seems to be no safe haven for us–if we are savers, the interest rates continually drop; if we depend on wages, work conditions become unsafe (as in our current coronavirus crisis). If we are investors, the markets go crazy. I don’t know what financial advisors can tell people about retirement right now that wouldn’t be bold-faced lies.

    1. B, no doubt we’re all facing “headwinds”. They all make the difficult game of retirement planning even more challenging, for sure. And, in fairness, I know some financial advisors who are straight shooters, but the reality is that it takes decades of responsible saving to be able to retire at age 65 or sooner while maintaining the same standard of living. Many folks don’t realize the size of the challenge until it’s too late, unfortunately. Concerning times.

  10. I have a friend and her husband who are living examples of this. They have spent decades tapping into their 401k’s as a savings account. She was laid off a couple years ago and never was able to find another well-paying job in her field so resorted to school subbing. Then he was laid off a year ago! No reduction in lifestyle…they just plowed through his severance and unemployment. Just last month, they sold their dream-home before losing it and bought a cheaper home cross-country (where he’s originally from). He finally found a job. So there’s somewhat of a happy ending. The scary part is they have less than $100,000 left in retirement accounts and they are ages 61 & 62. I doubt they have overcome their past spending issues. If they don’t, though, I don’t think the future looks keen.

    1. I work with someone who back in February cashed in her meager 401K to pay off her credit cards ($80K worth!). She said well now I don’t have to worry about getting laid off and having that credit card debt. I said yeah now you are going to have trouble replenishing that 401K.

      She said nah she’ll have SS and spousal portion of her husband’s pension (he’s in ill health and unlikely to live more than 3-5 years). I pointed out she needs to research the WEP rules for SS when there is also a pension involved. She was unaware of WEP.

      Before we were off the phone she was already talking about remodeling her kitchen and using a credit card to pay for it. Sometimes you just can’t fix stupid.

  11. This sad situation has been apparent for years. Our society just believes in immediate gratification. Our strategy is to convert as much as possible to Roth and implement a strategy to have over 50% of our long term savings in after tax dollars. I anticipate taxes will double in the next few years and SS will be reduced with means testing. I plan to have a very low reported income within two to three years after retirement.

    1. I’m wondering if they won’t find some way to do the SS means testing to also penalize those with large sums in Roth savings.

  12. According to the study the outlook is bleak for many – other than immediate gratification I wonder if lack of education is another key or personal finance avoidance maybe! I do think at some point we need to start in elementary school teaching personal finance and personal responsibility. If we do not ‘catch it’ at home then kids maybe can get it at school. Probably won’t find it on instagram. You learned it early and with years of a great savings rate and compounding interest- you did it and I appreciate you truly helping others with all of the aspects related to retirement.

    1. Dusty, I agree that the lack of personal finance in school curriculumns doesn’t help. I have a friend who’s trying to influence this, but it’s a long uphill battle. Thanks for the kind words on my work, much appreciated.

  13. I saw this Forbes article last month and it brought to light how much worse the pandemic is making this existing problem.

    Roughly 75% of heads of households ages 55 to 65 had almost no chance of being able to fund their retirement needs out of savings before the pandemic, Seitz noted during a recent Milken Institute webinar. But in the past few months, their finances have been deteriorating, with savings ravaged by market volatility, strapped workers tapping their 401(k)s to pay bills and near-retirees losing their jobs.

    I count my lucky stars I retired from a company that had great employee financial literacy programs in place, and I took advantage. We wouldn’t be where we are without them. Great article, as usual, Fritz.

    1. Grim statistics, for sure. I just had a high level of insecure feelings about retiring solo so I went overboard and super-saved myself to FI by age 58. Some folks thought I was touched in the head for living on so little of my income, but they aren’t laughing at me now.

    2. Great addition to the discussion, Lou. No doubt the pandemic has worsened an already grim situation. I’m counting my lucky starts along with you, though I do worry about the vast majority who are so dreadfully ill prepared.

  14. For comparison, is there any comparative data on how much the greatest and silent generations had for retirement, avg spending, etc?

    1. Good question, Brad. That data would be fascinating, but it wasn’t included in the survey. I do know many more of them had great pensions and tended to stay with one employer for their entire career, so their paths were clearly easier than those depending on 401(k)’s and other defined contribution schemes to fund their retirements.

  15. Hi Fritz, those stats reinforce our theory that Baby Boomers and Gen Xers who are in debt and/or behind in their savings would be well served to look into the practices of the FIRE movement, especially the Financial Independence part.

  16. My point is that everyone (other than the highly compensated) who entered the workforce in 1982 or later has had access to a perfectly fine, tax preferred retirement program – the Individual Retirement Account.

    Most didn’t take advantage of IRAs, which confirms they had priorities other than retirement preparation.

    Those of us who did prepare should be concerned that Congress may decide to “adjust” the promises we have funded – in our own retirement savings plans (erosion of savings purchasing power through Modern Monetary Theory), curtailment of our Social Security and Medicare benefits as our contributions funded promises to prior generations.

    We know that Social Security is an entitlement, not a contract, and that any tax preferences in place today (say Roth or the Stretch IRA, for example) could be eliminated in a split second.

    A few of us are even old enough to remember in 1983, when Social Security benefits were not taxable, 401(k) contributions were pre-tax for FICA and FICA-Med, when there was no 3.9% investment surtax to fund Medicare, when the wage base that applies to calculating benefits under social security also applied to Medicare taxation, when there was no Part B or Part D income surcharge (IRMAA), when you could elect a lump sum distribution and receive favorable 10 year or five year forward averaging, and where Medicaid was restricted to those who could not truly afford insurance coverage.

    Finally, our current world includes $25+T in national debt, plus $1+T in annual deficits for as far as the eye can see (or the CBO can project), plus exhaustion of the Medicare Hospitalization Insurance trust fund in five years and exhaustion of the Social Security trust fund sometime between 2032 and 2034.

    Gonna be a wild ride.

    1. Fritz,
      I really enjoy your blog. Always interesting and I usually learn something. We need to keep this survey in context. Looking at it in isolation does not tell the story. How does this survey compare to the same from 10 yrs ago? 20 years ago? 50 years ago? Society as a whole has come a long way baby! We are MUCH better off that our parents and grandparents. Historically, family took care of its own and homes usually had multiple generations. Today, not so much. In the 1930’s when SS started, retirements was 65 and life expectancy was 56. Today, SS retirement is 67 and life expectancy is approaching 80. The progress of medicine. Is it any wonder that SS is “stressed?”
      Think of COVID 19 as a repeat of the Spanish flu pandemic of 1917. Hopefully we will institutionalize the what we learn and not repeat the mistakes.

    2. Jack, it’s going to be a wild ride, indeed. Thanks for your excellent summary on how retirement legislation has changed in the past, and how it’s (inevitably?) going to change in the future. Unfortunately, those who have been most responsible have been penalized most heavily, a trend that that will most certainly continue. (That’s a lot of mosts, isn’t it?)

  17. Nice article Fritz and thanks for the data. Honestly, I think the “retirement crisis” is actually a symptom of the very real “(over)spending/consumer crisis” that’s been prevalent for decades.

    It’s painful to now see friends who, getting older, have come to realize the, in many cases, irreversibly adverse consequences of a lifetime of short-term financial decisions.

    Like the gentleman above stated, “you usually get the retirement you plan for.” I sincerely hope that recent events open the eyes of folks to think a bit differently.

    1. I thought the Great Recession would have convinced most people to change their financial habits, but it doesn’t look like it was as effective a teacher as I’d hoped. I know a few people who had very serious financial problems, where both spouses were out of work and burning through their savings, delinquent on their mortgages, and selling off their adult toys for a song just to get out from under the payments.

      The ones who fared the best, even with unemployed status, were those who already lived well below their means and, in many cases, were debt free.

  18. I think people will make it work somehow. Some will have to work longer and some won’t.
    Maybe lots of people will need to move in with their children or something like that.
    I don’t think we’ll see millions of seniors living on the street anytime soon.
    People will figure it out.
    Of course, it’s better if you solved the problem in your 40s and 50s. Then you can retire more comfortably.

    1. I don’t think we’ll see millions of seniors living on the street anytime soon.

      I certainly hope not, Joe. I suspect many children of baby boomers are going to be facing some unexpected house guests in the coming years. Let’s hope their kids show the respect their parents deserve, even if their parents’ situation is due to poor choices over the years. It’s going to be a fascinating trend to watch, and I’m extremely grateful that it’s unlikely that our daughter will have to deal with that situation (though we did have my mother-in-law live with us for 4 years, and I know you’ve taken care of yours. Sometimes you’ve just gotta do what you’ve gotta do).

    2. Nice article.
      With Gen-X having boomerang Millennials and likely looking down the barrel of needy Baby Boomer parents – those houses are going to run out of space pretty quick. So much for down sizing. I have mid-20s kids back and a mother looking for a permanent residence she can’t afford on her own. Empty nests may be a thing of the past.

  19. Brad, you asked:
    “For comparison, is there any comparative data on how much the greatest and silent generations had for retirement, avg spending, etc?”

    I’m sure there’s plenty of data out there, but we have to remember that the silent/greatest generations were squarely in the era of pensions. You worked for the same company all your life, got a gold watch, and a pension check every month. They may have saved some, but didn’t need to save as much as we need to. DB plans are all but a thing of the past.

    1. Actually Lou, median tenure of American workers over the past 6+ Decades has consistently been < 5 years of service. Similarly, most workers were never covered under a DB plan – the high point of coverage was in the late 70's – early 80's @ 38%. Further, most who were covered under a DB plan, never vested. That is, until 1989 (TRA 86 change to five year cliff vesting), most plans used vesting requirements of 10 years of service – double the median rate. For example, I worked for BP, the military, the federal government, the federal reserve, marathon, cooper industries and Tenneco prior to 1989 – each had a DB plan however, I never vested in any of those pension plans.

      Finally, too many who participated in plans and vested wound up getting less than they anticipated due to underfunding of plans, especially multiemployer pension plans.

      Bottom line, most American workers never had a vested pension benefit and most never will.

    2. I do wish there were data available on how many folks in previous generations were actually able to draw a pension. I do know that 62% of private sector companies offered them as recently as 1983 (now down to 17%), but I don’t know how many people vested, to Jack’s point. Hmmm…may have to get to work on google, though I’ve got a doghouse I need to finish for my wife’s charity. Priorities, priorities!

      1. To not include housing wealth is a mistake .Seniors going into retirement with a mortgage payment I’m sure is there biggest expense it stands to reason that the most popular use of a reverse mortgage is to eliminate the mortgage payment this alone can free up a good chunk of income that can go towards other expenses to give theme some relief.

      2. I defer to EBRI and Jack VanDerhei.

        See 2001 review.

        I’ve been a part of the retirement industry since my first gig in a plan sponsor role at a Fortune 100 energy company started in 1979. However, I was studying the industry, and specifically ESOPs and worker participation all the way back to 1976 when ERISA first started to take effect.

        So, while ~60% of workers had access to one form or another of a retirement plan, you have to add the 38% where the DB was primary to the 8% where the DC was primary to the 10% for those who had both, to come up with about 56%.


        See also:

        There is this myth that 401k was created to replace DB plans. The data show DBs were in decline before anyone ever heard of 401(k), let alone before the first 401(k) was adopted late, late in 1981.

        People remember this “golden age of retirement” thinking it used to apply before the advent of the 401(k). I was there and it just isn’t so. See: and see:

        Again, 100% of non-highly compensated wage earners have had access to a perfectly fine, perfectly adequate tax favored retirement savings plan since 1982 – the IRA. In 2018, according to the IRS, only 11% of workers eligible to make a contribution to an IRA did so.

        1. In 2018, according to the IRS, only 11% of workers eligible to make a contribution to an IRA did so.

          Jack, you are, indeed, and expert in this field! Great to have your comments in this thread. Of everything you said, the one sentence at the end is the most powerful you’ve written. Sums up the issue quite nicely. “Only 11%”, wow.

  20. Great article Fritz and love the discussion!

    I believe a retirement crisis is upon us, particularly for those that have not properly prepared. I agree retirement a luxury and one that fewer and fewer folks can afford. This pandemic just heightens an already worsening situation.

    Social Security is expected to run out of trust funds by 2035 at which point benefits could be reduced to 75%. Alternatively, the age of eligibility could be raised which might be more likely. Perhaps the new 62 could wind up being 67?

    1. The discussion on this one is amazing, I love it! I’ve found to be this interaction in the comments to be one of my favorite things about blogging. Some very intelligent people, having very responsible discussion about important topics. For the record, I expect both a reduction in benefits (likely combined with means testing) and a continual increase in the age of eligibility. The math just doesn’t work, and changes will be coming. Best to plan for the worst, and hope for the best.

      Great discussion, thanks for being a part of it!

  21. What I suspect most everyone needs myself included is how to determine the balance on spending now vs saving for later. Sadly neither of my parents lived to super old ages (65 and 81), we struggle with how to best balance the now vs the later. We have been diligent super savers for many years but is it enough? Will the tax implications and/or requirements to support the federal, state and local governments as well as everyone who didn’t save and plan eat all of my hard work? If anyone has a magic 8 ball to help me figure out those two questions please let me know. For now we continue to save, hope for continued employment and try to spend enough on life to feel like we are living!

    1. “If anyone has a magic 8 ball to help me figure out those two questions please let me know.”

      When that person replies to Carol, please cc me. I can’t wait to hear the answers to two of the questions that we all struggle with.

      Carol, we always attempting to live for today while preparing/saving for tomorrow. A tough balancing act, for sure. Also, you may be interested in my When Can I Retire series, it explains the methodology I used when deciding to retire at age 55, perhaps it will be of use to you.

    2. You asked:
      1. How to determine the balance on spending now vs saving for later?
      2. We have been diligent super savers for many years but is it enough?
      3. Will the tax implications and/or requirements to support the federal, state and local governments as well as everyone who didn’t save and plan eat all of my hard work?

      I’ll take a shot at responding.

      First, the future is promised to no one. I always recommend people fully leverage the tax preferences and employer financial support in their employer-sponsored plan and IRAs. That is, save all you can, more than you believe you can afford to earmark for retirement. Make sure that your plan has the right form of liquidity (plan loans) so that should you suffer an unanticipated expense or setback, you can access those funds without negatively impacting your retirement preparation. Consider Roth IRAs. Most of us will have 10 or more employers during our working lives. And, most employers have or will change the provisions of the employer-sponsored plan. So get while the gettin’ is good.

      2. If it isn’t enough, well, hopefully you’ve done all you can to prepare. If it is more than enough, have a plan for the excess, the residual. Consider the need, desire for a legacy. Some studies show that individuals born in 1st world countries during the last 20+ years who didn’t die before their first birthday, that as many as half may live to experience their 100th birthday. As a vignette in my old pre-retirement planning movie summed it up (A Week Full of Saturdays): “Plan to live because death will take care of itself.”

      3. It could happen. So, in my pre-retirement seminars, I usually include the following admonition: “Life is not a dress rehearsal for retirement. Start doing those things you always dreamed of.” My family history includes my father passing away at age 53 … Again, the future is promised to no one.

      Best to you and good luck. Jack

  22. I apologize if this question has already been addressed in the comments, but I wanted to ask about retirement costs for a married couple. Should I double the $48K average, or should I use a smaller number because of shared housing, utilities, insurance, and the like? Thanks in advance.

    1. Lee, good question, not sure what the assumption was in the study (you could likely find it if you dig through the footnotes on the study link). I think the best way to come up with an estimate for your retirement spending is to think about your specific spending rather than using an average, anyway. In our case, we tracked our actual pre-retirement spending for a year, then made detailed estimates for how things would change in retirement. This formed the basis of our entire “when can I retire” calculation, and it worked well for us. See my note above to Carol for a link to the series, it includes an entire post on how we estimated our retirement spending.

  23. This article and the comments had me reflecting on my family situation. I’m oldest of four siblings, all in our late 50s. Parents are gone; not much left behind. All of us were raised the same but ended up with very different attitudes towards saving for the future. I was the classic Ant—always working and saving, never in debt, living below my means, owning my cars for 12 years, worried about my senior years, etc. Now at age 59, I’ve positioned myself for a decent self-funded retirement, barring a major economic disaster.

    My other siblings are Grasshoppers. Two fiddled away their earning years with sporadic work, borrowed spending, preventable health issues, and bankruptcy at different times. Once in a while, I gave them monetary loans (gifts, really) at my parents’ behest. The remaining sibling is a good earner but has never denied himself or his family anything they wanted. Now his company is struggling during this economic shutdown and I figure he must be confronting how he’s going to finance a 25-year retirement (no pensions for those of us under 60) AND his daughter’s education.

    But maybe not? My Grasshopper siblings seem in denial about their situations. My few questions about their long-range plans are rebuffed. Finally, to wind up the Grasshopper and the Ant analogy, the Grasshoppers know that I’ve been gathering and storing my food all these years. When winter comes and my three grasshopper siblings come begging for food, am I supposed to give it to them? Is this my “major economic disaster” I referred to above?

    Obviously this scenario is as old as Aesop’s Fables, but it’s new to me and I admit I’m worried about what the future holds for me, my siblings, and my country.

    1. Wow, Elkay; I am so focused on launching boomeranging Millennials and figuring out a mother who has nothing but SS, I had yet to even factor in my ill prepared siblings – both grasshoppers and low earners. I have helped both multiple times as well, but never put myself Or my family at risk over it.
      Got me thinking from your added discussion point for sure.
      These are all the realities they don’t list out In the cookie cutter answers to retirement needs. Fritz and his subscribers help me think through the depths in a far more realistic fashion. Thanks to you all.

      1. “Fritz and his subscribers help me think through the depths in a far more realistic fashion.”

        And his subscribers help Fritz think through the depths in a far more realistic fashion, as well. Is this an amazing comment stream, or what?! Wow, great discussion!! Thanks to all of you for joining in, this is what “community” looks like, and it’s a very good thing.

    2. Elkay, I absolutely LOVE the “Ant vs. Grasshopper” metaphor. Would you mind if I use that concept for a future post? I will, of course, link to your comment and give credit where credit is due.

      It’s a GREAT way to explain the dilemma you (and many in our generation) are facing. A moral and ethical dilemma, for sure, and one that I’m afraid I can’t answer.

      1. I truly believe my siblings and others like them believe some deus ex machina is going to swoop in and save them, not realizing how lucky they (and our country) have been up til now.

        After leaving my comment, I looked up what the ending of the Grasshopper and Ant fable was. Some versions have the Grasshopper shivering in the cold and dying of hunger. Others have the Ant kindly inviting the Grasshopper inside and feeding him. I guess it all comes down to a) whether the Ant is generous instead of judgmental; b) if he has enough plenty of food for himself (what is plenty?); and c) how many Grasshoppers are knocking on the door!

        I will look forward to reading your future post and to see what you and others have to say about the moral and ethical dilemmas our pensionless, high-living generation is facing, both the Ants and the Grasshoppers. I’m sure it will come down to “every situation is different” but maybe there are some boundaries we Ants can establish?

        1. “I will look forward to reading your future post and to see what you and others have to say about the moral and ethical dilemmas our pensionless, high-living generation is facing”


          I think you put your finger on an important issue – “pensionless”. I may be wrong, but retirement has become a lot more complicated for many of today’s retirees (most likely not the average member of Fritz’ audience) as compared to my Parent’s generation. We are living longer (on average), may not have traditional defined benefit retirement plans, and may not have the luxury to work until we are 65 years old. For our generation, we need to have a lot more financial literacy as compared to earlier generations, including the math of how you get to retirement. My Parents both worked into their 60’s and had traditional Pensions. The last 7 years of their careers where very critcal to enabling them to save a lot of additional $ in their 401(k)s, IRAs, etc. I am not advocating for forced savings plans – but perhaps a lot more focus on financial education and literacy. Consider how many employees leave on the table the matching contributions that their Employers provide?

  24. Fritz I just love your articles. They are so right on and written with much common sense. Always looking forward to the next email along with purchasing your book on Amazon

    Thanks again for sharing your knowledge

  25. No question there is a retirement crisis looming, like a slow-moving train wreck. The half-hazard transition from defined benefit to defined contribution is proving to a failing system and this is the first generation to test such a system. Add to that the huge percentage of the population that does not even have access to a defined contribution plan. Add to that massive unfunded pension liabilities. Add to that the unrealistic return assumptions used in pension retirement models. Not a pretty picture.

    We need to feel sorry for more than those who do not have sufficient savings, as this will impact everyone possibly in a very significant way. Higher taxes, reduced benefits, delayed benefits, means testing, etc.

    Eventually, I think that we will end up at a mandatory contribution system, similar to Social Security is withheld from earnings. A voluntary system leaves too many behind that society will be forced to care for.

    1. I like the slow-moving train wreck analogy, Bill. Unfortunately, we can’t get off the tracks to avoid this one. I do think the mandatory system has some merit, and it’s been proven through wide application in many other countries. While SS does constitute a form of that, I do tend to agree that a broader system would be of huge benefit to those too irresponsible to manage their finances themselves. That said, I don’t like the idea of government putting even more hooks into our personal finances. Tough situation. Big train….

      1. Fritz, a rhetorical question for you – do you think that the average person is capable of successfully saving and investing, then successfully spending down their own retirement portfolio in a coherent way to ensure they will not outlive their money? Do you think the average joe has the interest or ability to devote the time and attention to this like you and many on your blog do?

        My feeling is that successfully managing a retirement portfolio and all of the complicated issues necessary to manage a drawdown portfolio (Market risks, interest rate risks, inflation risks, sequence of return risks, long term care risks, longevity risks, risks of myriad types.), is just too complex for the average joe to go it alone and hope for the best. Most will not or cannot afford to hire an advisor to act on their behalf.

        Pardon my rant Fritz!

        ICYMI – Bill Bernstein: ‘I Don’t Think the System Needs Nudges. I Think the System Needs Dynamite.”

        1. Good question, Bill. I think it’s all just a matter of what you focus on. Many “average” people can name every person on their favorite sports team, including where they went to college, their height and weight, their strengths and weaknesses. I would argue that personal finance is significantly more important than sports, but it’s all a question of priorities. That said, clearly the vast majority of “average people” don’t take the time to learn about finances, and the results are obvious. Rant justified.

  26. Just like you posted several weeks ago about your “secret” source of financial information, the comment section is a wealth of excellent information. After reading your post today, I spent 20 minutes reading all the comments. Some of them I was thinking “just like me”, others I was thinking “Never thought of that”.

    My wife and I do have a pension when we retire(3 years) at 54 and 52. However, we also have saved in 401K, Roth IRA, and personal accounts. Our thinking is that you never rely on just one source that you don’t control. We can’t control our pension. If we lose our pension or it gets reduced, we have 401K, IRA and personal accounts to make up for it. Others rely on pension strictly. We don’t rely on SS, but we keep it in mind due to future taxes.

    1. Not so secret anymore….wink.

      I’m with you on keeping a diversified source of retirement income. I’ve got a pension, 401(k), Roth, personal IRA, after-tax, and some “side hustle” income in retirement. I can cover “needs” without any SS, though I wouldn’t want to…

  27. I’ve seen various versions of these retirement savings statistics many times. And they always make me think of this question:

    I presume “retirement savings” refers to assets in IRA, 401(k), 403(b) or similar tax-advantaged accounts. How much do these folks have in assets that are not tax-advantaged but are still earmarked for retirement? Has anyone seen statistics that address this question?

    I’d guess this might improve the numbers somewhat, but suspect the results would still be dismal.

    1. For a feel on whether there is really a crisis (and no doubt, even if as few as 20% of the Baby Boomers were unprepared, that would be a mob of 15MM people), the best source, I have found, is Andy Biggs. This is a very recent OK summary of some of his work:
      o “Since 1979, the average retiree household income has risen by close to 90% above inflation, which is twice the growth of salaries for working-age households. So, retirees have gone from being a disproportionately poor segment of the population to a disproportionately rich segment.”
      o Gallup found that eight out of 10 retirees have enough money not just to survive, but to live comfortably. In the Federal Reserve’s Survey of Household Economics and Decision-making, only 4% of retirees said they are finding it hard to get by.
      o “Poverty rates among retirees are lower than among working-age households, and they’ve dropped considerably over the past 20 to 30 years,” he claimed. “So, there’s no retirement crisis for today’s retirees.”
      o “If you went back to the peak of defined benefit plans in the mid-1970s, 39% of workers participated in a defined benefit plan, and many of those wouldn’t collect a benefit due to strict vesting requirements. Today, Social Security Administration re-search finds around 62% of workers are participating in a retirement plan. You’ve had an over 50% relative increase,” Biggs said.
      o Additionally, Department of Labor data show that average retirement plan contributions rose from 5.8% of private-sector wages in 1975 to 9.6% in 2017, a two-thirds relative increase, “versus back in the day of traditional pensions.”
      o The reasons for the success are two-fold; No. 1, two parties contribute to 401k plans, the employee and employer, rather than just the employer. No. 2, many employers traditionally failed to fully fund their pensions.
      o “Federal Reserve data on total retirement assets, even accounting for wage growth, finds total retiree plan assets are SIX times higher than they were back in the mid1970s. These are not trivial differences.
      Americans are living longer, but they’re not living six times longer in retirement,” Biggs said. “Sure, we’ll have isolated problems in the future as we have today, but if participation, contribution rates, and assets all improve significantly versus the past, is there a crisis? No, there just isn’t a solid argument to be made for that.”
      o “We’ve had more improvements in 401ks in the past 10 years than we have had with Social Security in the past 30 years. To be frank, there’s scarcely a government-run retirement program at any level in the United States that’s well-funded. If these were private-sector pensions, run by stricter accounting standards, they’d be shut down. …”

      Yes, we have had individuals live their whole life in poverty, and, they are likely to live in poverty in their retirement years as well. But, don’t forget that poverty is an income calculation. One almost ten year old study of government reports on people living in poverty showed that income doesn’t equal wealth/possessions, claiming:
      o 80 percent of poor households have air conditioning. In 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.
      o 92 percent of poor households have a microwave.
      o Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks.
      o Nearly two-thirds have cable or satellite TV.
      o Two-thirds have at least one DVD player, and 70 percent have a VCR.
      o Half have a personal computer, and one in seven have two or more computers.
      o More than half of poor families with children have a video game system, such as an Xbox or PlayStation.
      o 43 percent have Internet access.
      o One-third have a wide-screen plasma or LCD TV.
      o One-fourth have a digital video recorder system, such as a TiVo.

      Keep in mind that the mean household age 65+ has accumulated wealth in excess of $1MM. However, means are averages, and averages can be (and here probably are deceiving). Medians are much lower.
      So, yes, we have tens of millions of Americans who will face a retirement crisis, however, for all but those who have spent their life in poverty, the lack of preparation was at least partly the result of prioritization.

  28. Fritz:

    Another wonderful and important post and great discussion thread. At the risk of entering into a dangerous discussion area… I am not sure that anyone in the comment stream has touched on how divorce can significantly reduce retirement savings for both former partners in a marriage. I do feel very lucky and blessed that my wife and I have been together for 30+ years, and have had similar goals about education/training to advance career goals, living below our means, saving and investing a high portion of our income, and how we want to spend our time in our early retirement (going on 6 years).

  29. If you take the average weight of a group of starving individuals and gluttonous individuals you arrive at a mean of an ‘Average Joe’. Does AJ ‘represent’ any of the individuals out of this group? The mean net worth in this case is completely misleading I think we can agree. Would have loved if article included the other percentile figures more than just the 50th percentile.

    1. The cnbc article also included the median numbers – half higher, half less:
      o Age 55-64: $187,300
      o Age 65-74: $224,100
      o Age 75 or older: $264,800

      How accurate the means and medians are is anyone’s guess, and I would guess, they are lower after the pandemic and market decline.

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