The financial situation for the elderly in the United States is worsening, resulting in a burgeoning retirement crisis. Over half of Americans aged 65 or older are surviving on an annual income of $30,000 or less. This income is primarily reliant on social security benefits, which often scantily cover essential living costs such as food, housing, and medical expenses.
The stagnant growth of social security benefits fails to keep up with the rising cost of living. This issue is aggravated further by escalating healthcare costs and increasing life expectancy, which demands a higher financial resource to sustain. These factors collectively deteriorate the financial health of US senior citizens, paving the way for a potential retirement crisis.
A recent report by Sen. Bernie Sanders presented various solutions, such as escalating social security payments and introducing automatic retirement saving plans. Sanders suggests expanding Medicare benefits to include critical initiates such as vision, dental, and hearing aids. Moreover, defending public pension benefits against reckless cuts is also an integral part of his proposed solutions. According to him, it’s the administration’s duty to secure a dignified retirement for senior citizens.
Current research indicates that the phase of retirement, once seen as a given, is progressively becoming a luxury many might not afford. Nearly 50% of households find maintaining their lifestyle after retirement challenging, and policymakers now must address this issue.
The report uncovers that 73% of less wealthy populations and 28% of wealthier populations face the likelihood of not maintaining their pre-retirement living standard. The retirement crisis adds substantial economic pressure on state governments, with states expected to cover an additional $1.3 trillion in expenses from 2021 to 2040 due to the growing number of vulnerable senior citizens.
Federal Reserve data shows that only 42% of Americans over 75 and 51% of those aged 65 to 74 have retirement savings accounts. Approximately 10% of elderly Americans live in poverty, a number that could rise to 38% without Social Security income. Therefore, the country urgently needs to revise its social security systems to be at par with, or surpass, those offered by other developed nations.
Interestingly, the US has the second-highest rate of elder poverty among G7 nations, after Japan. This highlights the imperativeness for the prompt and efficient implementation of strategies to avert a full-fledged retirement crisis.
