Experts: The retirement crisis is real

Their recommendations for solving America’s retirement issues vary, but investment, pension, and retirement experts speaking at the Milken Institute’s 2024 Global Conference last month agree the country faces a real crisis.

That word — “crisis” — is how TIAA (Teachers Insurance and Annuity Association of America) president and CEO, Thasunda Brown Duckett, described the situation, as reported by Pensions & Investments. TIAA is a financial services organization that is a private provider of financial retirement services in the academic, research, medical, cultural and governmental fields.

She suggested changing policies and  closing gaps in retirement access, savings, and guarantees in pensions.

Other panelists recommended more financial advisors for savers and future retirees, and solutions tailored for middle-income earners and not just for wealthy people.

It’s clear that people who are thinking about retirement have a fair amount of insecurity about it. USA Today calls one group “Beatlemania boomers.” They’re the late-stage baby boomers born between 1960 and 1965, and that report says they have “less retirement wealth, and much less retirement savings,” than boomers born between 1942 and 1959.

Their retirement savings — a combination of pensions, Social Security and 401(k)-type plans — were considerably lower than what older boomers had on hand in the aftermath of the Great Recession. 

That recession, in 2007-09, hit the late boomers in their peak earning years, according to a report called “What Happened to Late Boomers’ Retirement Wealth?

Jobs dried up, stocks and homes lost value, and the retirement plans of Americans born during the height of Beatlemania changed dramatically.

“Late Boomers have surprisingly low levels of retirement wealth compared to earlier cohorts,” the report says.

“The results show that part of the drop is due to a decline in the share of Late Boomers who are White, married, and have college degrees,” it says. “The main factor, though, is that Late Boomers saw a weakening in the link between work and wealth due to the Great Recession.”

Concerns are particularly high among people who are living paycheck to paycheck. As CNN reports, that reality has some Americans thinking they’ll never be able to retire with real financial security.

According to the U.S. Bureau of Labor Statistics, the number of U.S. workers over the age of 75 is forecast to almost double over the next ten years. 

Pensions are increasingly rare. Only 15% of private-sector workers had them in 2022, down from around 50% in the mid-1980s. More than one in four older adults get 90 percent of their income from Social Security — a trust that faces a huge deficit and that, without steps taken to address its challenges, will be depleted by the mid-2030s.

What’s left after that is 401(k) plans, but only half of private-sector workers take advantage of those. And in hard times, according to a Vanguard survey, many families tap those 401(k) plans for everyday expenses.

At the same time, candidates in this election year are talking about whether to make cuts to Social Security and Medicare, a debate that will animate races from president on down the ballot.

Our perspective is simple: it’s time to shore up our retirement plans, not dismantle them.