One of the foundations of the American dream is that workers will be able to leave their jobs at a certain age and then live a comfortable life in retirement. Despite the recent volatility of the economy, the dream appears to be relatively intact. The problem is making it a reality. Unfortunately, a growing number of Americans are unable to save enough to support their desire for a cozy post-workplace lifestyle. That failure could have significant implications for the U.S. job market and for society as a whole.
A new survey reveals a sad fact. Many Americans who wish to retire won't be able to do so at a time of their choosing. They will have to stay on the job to make ends meet.
The number of U.S. workers with no or very little retirement savings rose for the third year, according to the Employee Benefit Research Institute's annual Retirement Confidence Survey. Twenty-seven percent of respondents say that they have less than $1,000 in savings; 54 percent say that the total of their household savings and investments, excluding the value of their primary home and any defined-benefit pension plans, is less than $25,000. Those aren't the only numbers that are telling.
The number of workers who say they are currently saving for retirement dropped as well, from 65 percent last year to 60 percent in 2010. In addition, 24 percent of those surveyed say they have postponed their planned retirement during the past year. Overall, only 16 percent of survey respondents, the second lowest point in the 20-year history of the respected survey, are confident they now can save enough for a comfortable retirement. That certainly puts a dent in the American dream.
The dilemma is hardly a surprise. The current economy aside, the problem has been a long time in the making. For years, Americans have saved far less than their counterparts in other developed nations. Though the U.S. saving rate is improving, it lags beyond what economists say is necessary to provide a sound foundation for retirement.
In general, financial planners say that a family's retirement savings, including Social Security payments and any pensions, should produce about 80 percent of pre-retirement income. A majority of Americans fall considerably short of that target.
The growing number of those of traditional retirement age who now say they will remain on the job rather than retire could have a profoundly negative impact on a job market already beset by high unemployment. The longer older workers stay in the workforce, the fewer jobs available for younger workers. That scenario will help perpetuate both the joblessness and the inability to save for retirement that rightfully unnerves economic planners.
There's no ready antidote. The economy and the job market are improving, but only sustained growth -- never a sure thing -- can restore the confidence of U.S. workers and prompt them to renew their quest for the American dream of an adequately funded retirement.
Argueably worse than not being able to retire is to have retired,only to find that your savings earn almost no interest,that your investments are are falling in value,and the strong prospect that increasing inflation will bludgeon your purchasing power. You are left with no good options.
We may see parents moving in with their children;we may see a new age of thrift;we may rediscover vegetable gardens;we may see a rebirth of American ingenuity.
If we can make something good from adversity,we may begin to find what made America such a great country.
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