According to an article in The Week, half of all workers have put nothing away for retirement. Baby boomers have a median savings of only $78,000 while experts say to sustain a middle-class lifestyle across 15 or more years a retiree needs nearly one million dollars!
At the same time Medicare and Social Security trust funds run out of money, boomers may be without anything to fall back on. If it sounds scary well it is scary. And you should be scared.åÊ
The average balance in all 401(k) accounts is $60,000 so generations coming next are doing little to help their cause as well. A third of the people ten years from retirement have saved less than $25,000!
And to make things worse, people tend to stop funding their retirement or even borrow against it when they change jobs or have debt to pay. Of course the latter is somewhat understandable.åÊ
Consider in 1980, 60 percent of private sector employees had pensions. By 2006, only 10 percent did.
Maybe this is a lesson for future generations about savings. Because the harsh reality is that many of us will have to postpone retirement and keep working if the workforce will have us that is. And we’ll have to downsize our housing, our travel and most of all our expectations.