Four Telling Graphics Reveal the Severity of the Retirement Crisis

If there’s one generation in recent history that has most dramatically changed the retirement planning game, it’s the baby boomers. They’re one of the most talked-about generations today, with a host of well-documented challenges facing them. In a recent article, Pensions&Investment shared four telling graphics that depict the extremity of the boomers’ situation.

1. They Will Work Longer

A growing number of people age 65 or older who are remaining in the workforce, or re-entering it.  It is a trend that is predicted to continue, and while working through one’s retirement years may be beneficial, it’s not always feasible and is accompanied by a host of new, employment-related challenges: lower wages for less-skilled jobs, decline of traditional pension, retiring earlier than expected, forced retirement, etc.

Startling Statistic: 26% of baby boomers don’t plan to retire until age seventy or later.

2. They Haven’t Saved Enough

The most talked-about fact of all is that the majority of baby boomers have not saved enough to sustain retirement income for their projected lifespan. Even an attempt to increase saving in the years leading up to retirement will not make up for the compounding interest that could have been earned over the course of their careers.

Recent surveys suggest this fact weighs heavy on the minds of retirees–reporting that Boomers’ greatest fear is running out of money during retirement.

Startling Statistic: Only 24% of baby boomers are confident they will have enough savings to last throughout retirement (down from 36 percent in 2012).

For more on the retirement crisis, 18 Risks of Retirement Including One That is Changing Everything

3. They Are Retiring with Debt

The Boomer generation will carry more consumer debt into retirement than previous generations. Much of the boomers’ money in retirement will be tied up in debt they accumulated during their working years. Someone once said a boomer never met a credit card they didn’t like. This can be especially problematic when retirees move to a fixed income.

Startling Statistic: The baseline average for those 56 to 61 years old equals $39,000 in total debt. However, most recently, boomers had $99,000 in debt – the bulk of it in mortgages.

4. Rising Healthcare and Long-Term Care Costs

In the myriad of sobering retirement statistics, there is one that stands out more than most. It seems to be frequently overlooked and neglected in planning conversations: health care. Recent studies show that the typical retiring couple can expect to spend at least $275,000 in out-of-pocket costs on health care; that does not include the additional $130,000 needed for long-term care.

Startling Statistic: Only 27% of baby boomers believe they will have enough money for health care expenses.

More Startling Statistics

  • Just 39% of baby boomers have tried to figure out their retirement savings need.
  • Only 55% of baby boomers have any money saved for retirement.
  • 59% of baby boomers cite Social Security as a major source of their retirement income.
  • Only 43% of baby boomers are satisfied with how their lives are going from an economic perspective.

Is There Any Good News?

Yes, there is good news! Eighty-seven percent of boomers and existing retirees own their home.

And, according to the U.S. Census Bureau, the home equity of the average retiring sixty-five-year-old couple accounts for 68% of their total wealth. For most, that nearly doubles their amount of assets.

Simply stated, the average boomer is living in their biggest asset and most significant source of their total wealth. In the context of the current savings and longevity crisis, plus more than $6 trillion in accessible senior home equity, incorporating housing wealth into a retirement income plan just makes sense.

For more on starting the conversation with your clients, I suggest getting your copy of my recently released book, Housing Wealth: 3 Ways the New Reverse Mortgage Is Changing Retirement Income Conversations.

I take advisors step by step through the housing wealth planning process and answer the most common questions (and concerns) I have come across in my 20-year career.

What language can I use with my clients to help them understand how a reverse mortgage could be helpful?

Are reverse mortgages expensive?

How can both the advisor and client benefit?

What financial strategies can the reverse mortgage be incorporated into?

How do I know if my client is a good candidate?

Take a look at the Housing Wealth Chapter Guide to see all that I cover, and download the first chapter for free.

It’s also available on Amazon in paperback or Kindle version.

Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP® is a Retirement Income Certified Professional and one of the Nation’s Leading Educators on the Emerging Role of Reverse Mortgages in Retirement Income Planning. He is president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of Advisors as well as more than 3,000 personal clients since the year 2000
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®

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