Can You Afford to Retire?

According to a new AARP study, the vast majority of Americans over age of 50 believe they don’t have enough savings to support themselves in retirement - and 26 percent say they will probably never be able to retire at all.

What is the state of retirement savings?

12 July 2024 - EASTHAM, MA - Indira Venkat, senior vice president AT AARP Research says results from a new study raises an economic red flag for the near future. With 61 percent of adults over the age of 50 saying they lack enough savings for retirement, this gap verges on a crisis.  In fact, 26 percent of adults over 50 say this means they will probably never be able to retire at all.

What has caused this gap?

According to Venkat the number one cause behind his retirement gap among people in the "pretirement" stage has been a shift in the employment landscape.  Today, some 57 million Americans - about half of the workforce - lack automatic payroll deduction programs or any sort .Over the past several decades, fewer companies have offered pension, fewer offer a payroll savings plan, and fewer employers support 401Ks. Unlike prior generations,  this generation has had little employer backstop to encourage and support future planning, as part of its employment contract.

Adding the challenge, this group has also felt additional economic tension which impacted their savings, as those in the 50s, juggle increasing worries about paying for day-to-day expenses taking priority of over setting aside for tomorrow.

What is Pretirement?

The period of time while we are still working but know retirement IS ahead is sometimes called “pretirement” – a sort of runway to the days we’ll want to draw out rather than put in – and this turns out to be a particularly critical time for savings. That's one of the reasons AARP focused on people in the “pretirement” stage for its latest research.  It portends future trends ... but also still has time for change.

Is saving for retirement hopeless?

In its research, AARP has gathered a solid snapshot of a potential looming crisis – but says it is also using the data as a call to action. There’s still time to change the future, says Venkat. 

If you are one of the 20 percent with no savings at all, she says, do something. Do anything, however small it might seem. A small step taken now still compounds over time. Some people benefit from having a "savings buddy" she says, to encourage each other to save.  For others, planning using either structured free tools or working with a financial planner might be the path forward. The bottom line: although the most recent research might look grim, but it's never too late to start saving and changing the outcome.