Earlier in April was national retirement planning week, a national effort to help consumers focus on their financial needs in retirement. The first article I read about the topic, that week, was designed to scare people. How sad and manipulative.
A study published by the Insured Retirement Institute (an annuity trade group) found that 47% of Baby Boomers are already retired, and 89% do not have enough for retirement. Well, if that is true, then CNN, Wall Street Journal, NY Times, Washington Post and of course Fox would be blasting the airwaves with the crisis of retired Baby Boomers struggling to make ends meet in their “Golden Years.” In 1975, people were so strapped due to runaway inflation and fixed income, that an episode of “Good Times” (the show about a black family struggling to make ends meet, produced by Norman Lear), dealt with the topic of families buying dog food to make ends meet, because they could not afford people food. We’re not seeing these stories today.
In 2019, we don’t have 32 million retired Baby Boomers clamoring that they are impoverished. We don’t have numbers from the Bureau of Labor Statistics stating that a massive quantity of retired people suddenly jumped into poverty. Instead, what is happening is that liars are figuring that a scare tactic will sell more products (in this case, annuities.)
Below are the most current actual figures for retirement, based upon the latest government statistics. They show a much rosier forecast than the numbers painted by the Insured Retirement Board.
Average Retirement Income 2019 by Household Age:
|Age of Household||Median Income||Mean Income|
|Households Aged 55-59||$73,645||$103,423|
|Households Aged 60-64||$63,919||$89,882|
|Households Aged 65-69||$54,124||$79,772|
|Households Aged 70-74||$46,797||$68,0052|
|Households Aged 75 and Older||$31,893||$49,614|
SOURCE: Data is summarized from the US Census Bureau’s Current Population Survey (CPS) Annual Social and Economic (ASEC) Supplement. The CPS is a joint effort between the Bureau of Labor Statistics and the Census Bureau.
These numbers show what we would expect. Boomers who are retiring in their fifties have higher incomes, and those who retire later have lower incomes. However, 50% of retired persons have higher incomes than that assumed by the Insured Retirement Board.
The Board lays out the importance of a traditional pension plan, and states that among people older than 61, 38% will receive some type of traditional pension plan. The remaining 62% will have to rely solely on Social Security, personal savings, and retirement funds (401k, IRAs etc.)
The median amount saved in a 401k and/or IRA is $290,000 for people born during 1948-1953, and for the younger Boomers, it is $209,000. Although these numbers are not huge, it is also higher on average than the savings of older generations, who incidentally have not complained about not making ends meet in retirement, since the out-of-control inflationary period of the mid 70s-early 80s. We are not hearing about the two generations who retired prior to Boomers suffering huge poverty. What we are witnessing is that retirement needs (once food, clothing and shelter are factored in) are highly variable. People spend more if they have more, and spend less if they do not.
Social Security provides enough income to allow people to live modestly (above the poverty level), and Medicare minimizes health care costs enough to allow the vast majority of retired Americans to subsist. After those needs are met, people seem to ratchet up their lifestyles to match their income.