Retirement Statistics

Many Baby Boomers who are well into their middle-age years are still not yet ready to face retirement. The rising stock market and the improving real estate property values all disguise the fact that the hefty company compensation plans in the past are no longer present today. This leaves the average American dependent on Social Security and their IRA funds when they reach retirement.

Only around one in ten Americans today will be financially stable once they reach 65 years of age. Let us look deeper as to why we are facing this situation today. 47% of U.S. Households do not have a defined benefit or even a defined contribution plan. And 27% of employees who can qualify for the 401(k) plan do not contribute to this fund.

Another disturbing statistic is that at around the end of World War II, 42 workers were paying the Social Security for one person who received the benefits. Today, only three people pay for each beneficiary. And it is estimated that by the Year 2030, only two people will be paying for the Social Security of each beneficiary.

On the other hand, it is also important to look into the expected benefits that each recipient would receive once he or she retires. Social Security would only provide around 16% of the income of a married couple earning $50,000-$100,000, and it can only afford to give 9.5% of the income of a married couple earning $100,000 and above. This statistic is a great concern among people who are nearing retirement age.

And while working-age individuals believe that they can expect a higher standard of living once they retire and spend their time in leisure, they soon find out that this can be a myth. This is because they had not planned their retirement properly when they were still working and a lot of retirees reported that their standard of living had significantly declined compared to when they were working. For example, a study from the Employee Benefits Research Institute noted that 26% of retirees were “just making ends meet.”

The savings index of the Baby Boomers is also quite low. For example, the “Baby Boom Retirement Savings Index” which is published by Merrill Lynch annually shows that baby boomers were saving a mere 38.2 percent because they thought that this amount would be sufficient to meet their needs when they reached retirement.

The retirement statistics that are shown above should serve as a wake-up call for everyone. Retirement is the stage where you should enjoy the fruits of your labor. These issues are a grave concern for people who are nearing retirement. So it is important to plan ahead and be financially prepared once you reach retirement age. There are many investment options and retirement funds including IRAs that are available today. You should look into these options to be able to face retirement with excitement rather than fear.