The National Institute on Retirement Security is ringing the alarm on the upcoming silver tsunami.
Most Americans will not have enough money for a financially secure retirement, and they are worried about it, was the testimony of Dan Doonan, executive director of the National Institute on Retirement Security (NIRS), at a hearing before the Senate Health, Education, Labor, and Pensions (HELP) Committee.
Moving away from pensions and the upcoming “silver tsunami” (the term being used to describe the huge number of people approaching retirement age) contributes to a perfect storm of retirement trouble.
“We’re encouraged that the Senate HELP Committee is taking a hard look at the retirement savings shortfall facing far too many Americans,” Doonan said. “The data clearly suggest that we need to rethink our nation’s retirement infrastructure because the current system is leaving the middle class behind. Finding solutions to ensure Americans have access to pensions, defined contribution plans, and Social Security is the best path forward for employers, employees, and the economy.”
In his testimony, Doonan detailed the scope of the retirement savings shortfall.
NIRS research noted that for Generation X, a generation that is quickly approaching retirement and the first that will retire largely without pensions, the bottom half of earners have only a few thousand dollars saved for retirement. This means most Gen Xers are not even close to having enough savings to retire. And when Americans don’t have adequate retirement income, they are more likely to fall into poverty or turn to public assistance programs or families to make ends meet.
Boomers Are Spending More Than They Can Afford
Increased spending on retirement is a huge problem as well. Results from the 2022 Spending in Retirement Survey published by the Employee Benefit Research Institute (EBRI) found that retirees are spending much more or a little more than they can afford in 2022 (17% in 2020 vs 27% in 2022).
Inflation appears to be a major driver of the misalignment between expectations and reality, a double-edged sword that undoubtedly increases actual spending but also reduces spending, likely out of a desire to protect future purchasing power,” explained Bridget Bearden, Ph.D., research and development strategist, EBRI.
Read More:
- Boomers Are Spending More Than They Can Afford, Report Says
- Inflation Is Still Beating Our Paystubs- Here’s What to Do About It