David Madland and I reviewed the evidence on the retirement crisis and what this growing crisis means for the Center for American Progress.
While individual visions of retirement vary, everyone shares the desire to have economic control over their life in
retirement. Most people who reach retirement age also wish to end their full-time career employment, although many want to remain productive through part time work, volunteerism, starting a business, or caretaking. Before goals and aspirations can be pursued, retirees must be able to pay for basic costs of living, such as housing, rising healthcare costs, utilities, food and other essentials. Simply maintaining their standard of living post-retirement requires a substantial amount of money, never mind the additional savings that would be needed to pursue new objectives.
Much of the academic research finds that households won’t have enough money saved to retain economic control in retirement. Studies which conclude that most households are prepared assume that people can and will lower their standard of living post-retirement. More optimistic pictures of retirement preparedness suppose that households will muddle through by delaying or changing their retirement plans, reducing spending, and that many will get help from friends and family or rely on public assistance. However, for most, muddling through retirement is not an acceptable alternative to financial control and economic security. Policy measures can and should be taken to strengthen retirement preparedness through building up Social Security, by helping people save, strengthening savings incentives and helping households better manage their investments.