There are a lot of little things that people have to worry about as they age — like balding, especially with about 28 million U.S. women currently dealing with hair loss. But age is also accompanied by more serious concerns, like financial stability during retirement. And a new study shows that half of middle-class Americans could now face poverty when they retire.
A recent study from the Schwartz Center for Economic Policy Analysis at the New School (SCEPA) found that the risk of more Americans sliding into poverty during retirement has been increased due to factors like depressed asset values, decreased earnings, and increased healthcare costs. And while the average age of retirement is 63, about 74% of Americans are now planning to work past this age to ensure they have financial stability.
Findings from the study show that by the time they reach 65, 40% of middle-class Americans will be at least near poverty, if not below the poverty line. Furthermore, the study found that if workers between the ages of 50 and 60 retire at 62, 8.5 million of those workers are expected to fall below twice the Federal Poverty Level. About 2.6 million people are projected to have the worst retirement incomes at $11,700.
SCEPA said that two main concerns for people falling below poverty levels are lack of employment options and poor health. As older people generally require the most medical care, rising health care costs is an immense concern.
In 2010, healthcare expenses for people ages 65 and older amounted to about $18,500. Healthcare costs have continued to rise over the years and experts predict through the U.S. Census Bureau data that there will be 83.7 million people aged 65 and older in the U.S. by 2020.
According to Teresa Ghilarducci, one of the authors of the study, the $12,060 that the federal government claims is the official poverty level for one person should really be $24,120 as a more realistic amount.
To avoid slipping into poverty after retirement, experts do recommend that people work as long as possible — especially with retirement security losing about $2.8 trillion due to the stock market crash in 2008.
Researchers at SCEPA, and other financial professionals as well, are recommending that stronger protective measures are put in place. Things like stronger social security and guaranteed retirement accounts (GRA).
So while it’s impossible to predict the future, you should keep this study and other data in mind and plan as best as you can for retirement to ensure you’re financially stable.
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