More than half of Americans have insufficient amounts saved for retirement. Photo Credit: Miki Yoshihito/Flickr.com/CC-BY
The number of people who feel financially confident about entering retirement are an increasingly small portion of the population. Falling real estate values and a volatile stock market have made soon-to-be retirees fairly nervous. To make matters worse, energy prices could be due for a large increase, and politicians may be gunning for Social Security.
Survey indicates most don’t save enough for retirement
The Employee Benefit Research Institute recently released a survey that found about 50 percent of the people who were surveyed did not feel confident about their finances after retirement, according to USA Today. In the survey, 33 percent said they were “not too confident” and 27 percent they were not confident at all. The survey also found that 56 percent of subjects had less than $25,000 saved or invested for their retirement, not including their homes. And 29 percent had less than $1,000 set aside for retirement. The survey also found that 74 percent of workers planned to find other work post retirement, and 22 percent said they have major debts.
Traditional bedrocks of retirement not so solid
One of the traditional foundations of a solid retirement plan is real estate. Some people finish paying off their homes before retirement and thus don’t have to worry about paying for housing. Homeowners also have the option of pocketing the cash from selling their homes. However, home values have fallen 31 percent since the pre-recession peak, according to CNN. Since it is also being predicted that real estate values will fall again, or “double dip,” people staring down the barrel of impending retirement are not likely to realize nearly as much of a profit from the sale of their homes as they planned. Since very few people ever pay off a mortgage in full, the profit realized from the sale of a home is likely to be very modest in the current market.
Social Security could be in Congressional sights
The climate in Washington D.C. is currently favors cutting spending. The largest single budget item, Social Security, ran a deficit last year for the first time in more than two decades, according to MSNBC and will need an overhaul before it depletes all the surplus cash in the Social Security trust fund in 2037. There is a lot of speculation that the Social Security Administration is going to experience major cuts, especially in benefits, in the near future as the Baby Boomers will put further strain on the national pension plan. Few workers enjoy a traditional pension, or defined benefits pension plan that lasts for life upon retirement. Only 33 percent of private sector workers had that luxury in 2005, according to Forbes. As Social Security becomes less dependable and investments like real estate become less valuable, retirement may soon become a luxury reserved only for the wealthy.
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