Twenty percent of those age 65 and up haven’t retired. Many can’t afford to.
On April 22, 2019, Suzanne Woolley, writes on Bloomberg:
Just as single-income families began to vanish in the last century, many of America’s elderly are now forgoing retirement for the same reason: They don’t have enough money. Rickety social safety nets, inadequate retirement savings plans and sky high health-care costs are all conspiring to make the concept of leaving the workforce something to be more feared than desired.
For the first time in 57 years, the participation rate in the labor force of retirement-age workers has cracked the 20 percent mark, according to a new report from money manager United Income (PDF).
As of February, the ranks of people age 65 or older who are working or seeking paid work doubled from a low of 10 percent back in early 1985. The biggest spike in employment has gone to college-educated older workers; the share of all employees age 65 or older with at least an undergraduate degree is now 53 percent, up from 25 percent in 1985.
This rise of college-educated older workers has pushed the demographic’s inflation-adjusted income up to an average of $78,000, 63 percent higher than the $48,000 older folks brought home in 1985. By comparison, American workers below the age of 65 saw their average income rise by only 38 percent over the same period, to an average of $55,000. United Income’s calculations draw on recently released data from the Census Bureau and the Bureau of Labor Statistics (BLS).
There’s a mismatch between older workers who need the income the most and those who are able to work and working, said Elizabeth Kelly, senior vice president of operations for United Income and a former special assistant to the president at the White House National Economic Council during the Obama administration.
“These are the more educated, wealthier individuals in better health who are continuing to work, but it’s probably their less-educated, working-class counterparts who need to work the most,” Kelly said.
The BLS expects the big wave of aging baby boomers to represent the strongest growth in the labor force participation rate through at least 2024. “By 2024, baby boomers will have reached ages 60 to 78,” a BLS reportnoted. “And some of them are expected to continue working even after they qualify for Social Security benefits.”
The retirement math is ugly, even for those who are seemingly well-off. Teresa Ghilarducci, an economics professor at the New School for Social Research, has estimated that Social Security replaces about 40 percent to 50 percent of one’s pre-retirement income. The general thinking is that people need around 80 percent of pre-retirement income to get by after they stop working. (Online retirement calculators can give a rough sense for what you need to save, and earn on savings, to get there.)
The typical worker in the bottom 50 percent of the income distribution, earning less than $40,000 a year, has no retirement savings. Those in the middle 40 percent of income distribution, earning from $40,000 to $115,000, have a median amount of $60,000 saved, according to Ghilarducci’s research.
Workers in the top 10 percent of income distribution making more than $115,000, meanwhile, have a median amount of $200,000 saved. They, too, are woefully under-saved, although it’s worth noting that these calculations don’t include real estate and other tangible assets, or the chance of an inheritance.
Ghilarducci’s rough estimate of what a typical college-educated professional must amass to retire fairly comfortably? “Over $1 million or 2.” No wonder more people are working longer.
Bernie Sanders Comments:
We cannot tolerate an economic situation where people who have worked their whole lives are unable to save for retirement, and older workers are unable to retire with dignity. Under a Bernie Sanders administration, the wealthy are going to finally pay their fair share so that we can strengthen and expand Social Security and Medicare, and seniors can retire with the dignity that they deserve.
Gary Reber Comments:
While Bernie Sanders states that “we cannot tolerate an economic situation where people who have worked there whole lives are unable to save for retirement,” he falls way short of defining solutions other than redistribution of the wealth accumulated by those who have been fortunate, in that they have had good paying jobs enabling them to save and deny consumption to risk investment to become a productive wealth-creating, income-producing capital asset owner or have inherited from family members who are owners of productive capital assets. In either case, their wealth is directly tied to owning productive capital assets––the non-human “things” applied to producing goods, products, and services.
These people make up roughly just 10 percent or less of the American population, with the vast majority dependent their entire lives on earning solely through a job that barely supports them and their families through life, or are dependent on taxpayer welfare programs to exist.
