Retirement Security Eroding for Middle-class Americans - Retirement | Financial Buzz

Retirement Security Eroding for Middle-class Americans

Retirement, National Retirement, Risk, HouseholeThe latest National Retirement Risk Index, published by Boston College’s Center for Retirement Research paints a harsh reality for middle class America. About half of today’s current working population will not be financially able to maintain its current standards of living post retirement,   and these are just estimates. Researchers warn that the actual numbers could be even higher.

The index looks at pre and post retirement standards of living across working-age households. Present day economic insecurity has trickled down to impact the middle class. Wage increases have been rare or insignificant. Many have not experienced any big jumps in pay in the past 15 to 20 years.

Odds are stacked up against most

Eric Kingson, co-director of Social Security Works speaking at the Annual Scientific Meeting of the Gerontological Society of America, indicates that the odds are against the majority of working class America. Rising healthcare costs have not been accompanied by wage hikes. The economic downturn has wiped out the value of real estate investments made by many Americans. Pension coverage too has become less secure. Those who have taken career breaks to look after a loved one have paid the price. Kinson pointed out that the United States is one of the few countries in the world that still do not have paid leave for caregiving. It means, time-off to look after a sick family member will come at the cost of your income.

Elusive retirement security

Nancy Altman, co-director of Social Security Works mentions how critical Social Security will become in the years to come. According to Donald L. Redfoot, senior strategic policy adviser at the AARP Public Policy Institute, people define themselves as middle class based on income security as well. It is not just the capacity to earn a certain amount at present. As project director of AARP’s Middle Class Security Project, his team studied the prospects for a financially secure retirement for middle class Americans. Data from the project said that the 50-plus households that owned their homes dropped from 40 to 36 percent between 2000 and 2009. With housing related expenses comprising 40 percent of expenses for older adults, this statistic is sobering.

Health insurance costs are rising and medical bills are crippling. Workers over 50 are also three times as likely to face a disability. As much as 47 percent of America aged 56-62 runs the very real risk of being unable to afford healthcare in retirement.

A secure retirement comes from a carefully balanced set of financial decisions. Unfortunately, many of these seemingly secure investments can come tumbling like a house of cards in the face of an unforeseen event. For now, retirement security does seem el