Tyler Le/BI
- Americans say they don't have enough money for retirement, with a solid chunk having no savings at all.
- It's part of a growing retirement crisis, where many can't afford to throw in the towel.
- At the same time, the economy is about to see the "peak boomer" generation retire and deplete their savings.
Pam Tourangeau said at 68, she doesn't have a big nest egg.
She's still working part-time as a therapist but said she's slowing down: "Fatigue is a big part of getting older."
She remembered that her ex-father-in-law had a large pension when he retired — a practice that's far more uncommon these days. As the Congressional Research Service found, defined contribution plans, which are retirement plans like 401(k)s that rely on employee contributions and are subject to market fluctuations, began to overtake defined benefit plans, which include pensions, in the mid-1980s.
"They don't do that anymore," she said. She feels like boomers have gotten stuck in a generation gap — too young to receive pensions but too old to really be part of the tech boom.
"I was just doing all the love, peace, and let's be happy kind of thing. But money wasn't our focus," she said. "Now, all of a sudden, it's become a problem."
Tourangeau is part of a generation of older Americans who don't feel confident in their financial situation. It means the retirement crisis could get worse.
On Wednesday, AARP released the results of a January survey delving into retirement outlooks for Americans aged 50 and above. It found that many of them are not feeling confident with their finances. Particularly, one in five older Americans surveyed reported having no retirement savings, and over half of them do not think they'll have enough money to keep them afloat in retirement.
Inflation is straining their finances even more — according to the survey results, 37% of aged 50 and older respondents were worried about affording basic expenses like housing and groceries, with 70% worried that everyday prices are rising faster than income. With all those economic stressors, 26% of older people not currently retired say they never expect to retire.
"Every adult in America deserves to retire with dignity and financial security," Indira Venkateswaran, AARP Senior Vice President of Research, said in a statement. "Yet far too many people lack access to retirement savings options and this, coupled with higher prices, is making it increasingly hard for people to choose when to retire."
"Everyday expenses continue to be the top barrier to saving more for retirement, and some older Americans say that they never expect to retire," Venkateswaran added.
Many older Americans are still working. While the US civilian labor force level for those 55 and older is high, the labor force participation rate for those 55 and older has continued to be lower than the pre-pandemic rate in February 2020. Any of those who leave the workforce to retire may need to rely on any retirement savings they have built.
Still, only a small share of older Americans not retired said they and their spouse or partner will need less than $50,000 for retirement.
During a Wednesday briefing, Nancy LeaMond, AARP executive vice president and chief advocacy & engagement officer, told reporters that the survey "should be a wake-up call for every adult, young or old, as well as policymakers at both federal and state levels." She referenced a few legislative initiatives AARP supports that would bolster retirement security for older adults, including the bipartisan Retirement Savings for Americans Act, allowing the government to match contributions into savings accounts for low- and middle-income workers.
"We know that Americans are far more likely to save for retirement when they can do it through this kind of work-based option," LeaMond said.
That new data comes as the country is gearing up for an onslaught of retiring peak boomers. Those are Americans born between 1959 and 1964, who will begin turning 65 this year; they're the last boomers to enter retirement and the biggest boomer cohort to start throwing in the towel.
An analysis of Federal Reserve and University of Michigan Health and Retirement study data by Alliance for Lifetime Income's Retirement Income Institute found that just over half of the peak boomer population have $250,000 or less in assets. That means that many will likely run through their savings, and have to depend on Social Security to stay afloat — a benefit that's already potentially imperiled, with Social Security only having enough money to continue paying out full benefits for the next decade.
Are you a peak boomer or older American worried you won't have enough money for retirement? Contact these reporters at jkaplan@businessinsider.com, asheffey@businessinsider.com, and mhoff@businessinsider.com.