Tuesday, June 25, 2024
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Life After Retirement Doesn’t Look Great for Most Senior Americans, Here’s Why

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Life After Retirement Doesn’t Look Great for Most Senior Americans, Here’s Why
Source: Pinterest

Life After Retirement Doesn’t Look Great for Most Senior Americans, Here’s Why

Source: Pinterest

Many Americans who have retired are not living a very happy life for many reasons, leading many to wonder why this is the case.

The Retirement Crisis

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Many Americans work throughout their lives. However, when they retire, they do not do so happily. This is because they barely have enough savings to live without a paying job. This is quite bad as people retire after 50 years of hard work and labor with nothing to show for it. In addition, many people suffer from this problem.

Is 65 Early for Retirement?

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Larry Fink, the CEO of BlackRock, an investment firm, believes the first problem is that Americans retire too early. He wrote, “No one should have to work longer than they want to. But I do think it’s a bit crazy that our anchor idea for the right retirement age — 65 years old — originates from the time of the Ottoman Empire.”

The Reality

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In reality, older workers are not ideal for workplaces. Not only do they have a lot of health issues at that age, but they also face other problems at work such as discrimination. According to AARP in 2022, older workers face a lot of age discrimination at work. Therefore, many retire at a median age of 62 as a survey revealed.

It Is Not Easy to Save

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The major problem that retirees face is the difficulty of saving. It is not easy to save. Bernie Sanders, an Independent Senator from Vermont published a report on American retirees. From his survey, about 57 million Americans cannot easily save for retirement. They are more likely to save via payroll or if their workplaces already have a built-in retirement plan.

A Deep Analysis

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The report also showed that nearly half of Americans over the age of 55 don’t have savings for their retirement. Without a doubt, that is quite worrisome as most people retire seven years later. In addition, 52% of Americans aged 65 and older live on less than $30,000 per year. This also shows that many people in the retirement age live in poverty.

Smash the Tax Cap

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Sanders also has a solution for retirees. However, this is much different from that of Fink’s. Sanders believes that the solution is to “smash” the income tax cap and a lot of experts agree.
Sarah Rawlins of the Center for Economic and Policy Research noted that a mid-range salary worker pays a higher tax cap than millionaires. Therefore, if the government can remove this, people can save better.

Retirement Age Is Not the Solution

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Teresa Ghilarducci of the New School of Research is another expert who disagrees with Fink’s solution. “After a 40-year-old experiment of a voluntary, Do-It-Yourself based pension system, half of workers have no easy way to save for retirement,” she said. Therefore, she believes the problem lies with the limited saving options and capabilities.

Fink’s Review

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Fink has also considered the opinions of other experts closely. In his report, he praised Australia for requiring their income workers aged 18 to 70 to put a certain percentage into a fund. This has made the country build the 4th largest retirement system in the world. “As a nation, we should do everything we can to make retirement investing more automatic for workers,” his annual letter read.

Benefits of Older Systems

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According to Fink, the California State Pension System, CalPERS, was the reason why his mother had a successful retirement plan that worked for her. He cited her experience as an example, saying that the old ways have their benefits. However, only about 15% of employees had access to the system in 2021 and the number has reduced.

It’s All Promotional

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Laurence Kotlikoff, an economist from Boston University said that Fink’s retirement age raise idea is not as selfish as some may think. “A lot of people who talk about Social Security reform on Wall Street want to privatize it in some manner and make money,” he said.
Therefore, Fink’s method will require making money,” he suggested. Naturally, Fink would want Americans to boost their retirement assets as long as possible.

A Good System Will Help

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The solution to this recurring problem is a good system. Ghilarducci also says that “the solution is a good pension system that allows retirees to gather enough money, allow them to invest, and spend them wisely to last for the rest of their days.”
Therefore, she approves of the Retirement Savings for Americans Act 2023, which will help about 80 million Americans without employer-sponsored pensions.

Life After Retirement

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If people are able to increase their retirement funds, the economy and quality of life will be much better. Therefore, the Biden administration might need to rethink its current “no-plan” policy as it is not helping as much as they thought it would. Instead, retirees are more likely to listen to experts like Fink and Ghilarducci as they have more experience on this issue.