7 Reasons Future Workers May Not Be Able To Retire

For today’s workers, the idea of retirement may be a long-distant memory. As we look into the future — in a galaxy not-so-far away — there are a number of very real headwinds that may postpone or even prevent today’s workers from retiring like their parents or grandparents were able to. These include:

• High Student Loan Debt
  • There are currently 44m people in the country who average about $30k in student loan debt (and we’ve seen about an 11 percent default rate). Those debts are huge drags on retirement savings as young people tend to focus (and rightly so) on paying off that debt.
• Difficulty Landing Well-paying Jobs (or Any Jobs, for That Matter)
  • The millennial unemployment rate stands at an 12.8 percent, compared to the national average of 4.9 percent. This disadvantage creates obvious impediments when it comes to the savings and retirement rates for young workers who would otherwise be in the best position to take advantage of the benefits of compound interest on their retirement accounts.
• Expensive Real Estate/Rent
  • We seem to have recovered from the 2008 real estate bubble bursting, and are now living in a world where rents and home values in high-paying regions are flipping living expenses back to the “unaffordable” side of the equation. For both buyers and renters, this additional expense is burdensome, and it drastically impedes their ability to save for the future.
• Low Savings Rates/401k Deposits
  • A sad statistic of current savings incomes shows that 58 percent of American workers are not enrolled in a pension or 401k program. With the additional expenses already mentioned, this doesn’t bode well for workers when it comes to being able to retire without significant government assistance.
• Social Security No Longer a Certainty
  • Younger generations of workers, particularly the 18- to 29-year-old bracket are feeling increasing uncertainty about the future of Social Security. Gallup found that only about one in five young adults expected to receive a Social Security benefit when they retire.
• Life Expectancy Keeps Increasing
  • Anyone who even tangentially follows US politics knows the future of healthcare in the country remains uncertain. While Medicare may be more protected than the ACA (for now), it remains to be seen whether these social contracts with the American people will continue to be protected by lawmakers. Between that and rising healthcare costs, the cost to retire and live well will increasingly get more expensive.
• People Aren’t Educated on Their Retirement Needs, and Don’t like Talking about It
  • Most people don’t like to talk about their finances with friends or family; it’s taboo. So most people are worrying about their finances but few are willing to talk specifics to the people they’d normally go to for advice or support.
  • In a survey of retirement readiness from Bank of America, and insane 81 percent of respondents did not know how much they needed in retirement.

4 Things You Can Do Today to Help You Retire in the Future:

1. Live Within Your Means! Buying that fancy new car or living in that super high-end apartment may be nice now, but it will limit when you can stop “working to live” in the future. Save early and keep those expenses down!
2. Pay Down That Debt! The earlier your student loans are paid off, the faster you can start saving!
3. Make Healthy Choices! It goes without saying the healthier you live today, the cheaper your healthcare — on average — will be when you are older.
4. Determine What Retirement Means to You! Does retirement mean you can work part-time, for a job that fulfills you? Or does it mean travel? Or volunteer work? Retirement takes many forms; figure out what will mean the most to you so you can work towards that goal in the future.