A new study suggests that the financial security retirees had hoped would get them through their senior years isn’t enough to maintain their pre-retirement standard of living.
There are more Baby Boomers retiring every day, and according to Clever Real Estate’s The State of Retirement Finances: 2021 Edition, retirees have $178,787 in retirement funds -- about 39 percent of the recommended $465,000 savings -- and, as a result, are having to tighten budgets and give up some of their self-indulgences.
In fact, two-thirds of retirees have less than $50,000 in retirement funds which leads to more than 80 percent of households with adults retirement age or older experiencing financial struggles and buying less to try and stay flush.
At the top of the retirees’ crunch list of challenges are basic necessities, including medical bills (47 percent), groceries (43 percent), and credit card bills (37 percent). Because all of those must-pays are items that will continue to pile up, 1 in 4 retirees worry they will outlive their savings.
The financial impact of the pandemic
While the COVID-19 pandemic wore thin everything it could get close to, retirees saw their debt more than doubling in 2020.
“That decline in household wealth is particularly concerning during a pandemic that has disproportionately impacted the health of older adults,” said Dr. Francesca Ortegren, PhD, the Data Science & Research Product Manager at Clever Real Estate.
“Infection can lead to unexpected costs related to acute or long-term healthcare, loss of the ability to live independently, and the death of a partner. Many don’t have the means to cover a financial shock, and even fewer have a cushion to fall back on.”
Get a job
With financial life not quite as rosy as hoped, many seniors have had to take on part-time jobs to cover living expenses.
Yes, some of those part-time jobs may seem menial, but they’re plentiful and the average employer values older workers as much as — if not more than — younger workers because they’re viewed as more productive.
According to an analysis of jobs posted on RetirementJobs.com done by researchers at Boston College, the large majority of listings for retirees in late 2019 were in the following job categories:
Office or administrative support (15 percent)
Healthcare support (14 percent)
Computer and mathematics, e.g., programming (10 percent)
Transportation and material moving (9 percent)
Healthcare practitioners, management, and food preparation or serving (7 percent)
Despite the availability of jobs for seniors, the full-time jobs analyzed paid less than the overall average -- $43,800 vs. $50,000 -- and were less likely to offer fringe benefits, putting post-retirement workers at a disadvantage when it comes to income.
“Retirees who are in need of additional income should be ready to negotiate higher salaries when reentering the workforce,” Ortegren told ConsumerAffairs. “Many employers find older workers really valuable, so take advantage of that and focus on your experience.”
Putting on a happy face
Still, despite financial regrets during their working years, retirees are putting as much of a positive spin on the situation as they can.
Forty-two percent of retirees believe their retirement is more comfortable than their parents’ retirement was and 60 percent think they’re better off than their children will be when they reach retirement age.
However, it appears that Millennials have picked up on this challenge and are leading the way in increasing retirement savings.
“Many Millennials are keenly aware of the impact of a bad economy after experiencing first hand the 2008 financial crisis in their early careers. As a result, they started saving earlier than previous generations,” Ortegren told ConsumerAffairs.
“Unfortunately, stagnant wages, less overall wealth compared to earlier generations, and possibly losing out on Social Security income could still hinder millennials’ ability to save enough for a comfortable retirement.“