Middle Class. Dreaming of retirement? Forget it
Story By:
Source: NBC
Published Wed Jul 16, 2008, 09:13 AM MDT
Updated Wed Jul 16, 2008, 09:13 AM MDT
As average Americans struggle to get through tough times, a new study warns of an impending retirement crisis. If Baby Boomers keep spending at current rates and don't save more for retirement, they'll be on the job for much longer than they ever planned.
For Karen Yeschin, retirement at age 65 is out of the question. "I fully expect that I will not be able to retire and my husband will not be able to retire," said Yeschin.
A study by Ernst and Young confirms what she and other Americans already suspected: three out of five middle class retirees will probably run out of money in their golden years unless they drastically cut back spending.
That's why so many keep on working. "I honestly thought I'd be retired by now. My husband is in the same boat. So we will also continue working," said Pat Phelan.
The study says new retirees must cut spending 24% to avoid outliving their money and by 37% if retirement is still years away.
All of this work is from a combination of retirees living longer, rising prices, and falling investment income.
The study's authors say people need to save more, which isn't easy these days. "It's very hard with gas prices at $4.35 now and prices at the supermarket," said Monique Barnett.
"People are not thinking about retirement. They are just worried about getting through the month," explained Matt Taylor.
"Pensions are pretty much gone in the private sector and 401K and Social Security is not going to cut it," added Jerry Milliken.
Joe Arenge didn't need a study to tell him that. "Unfortunately, I'm going to have to work forever and ever because Social Security won't cover the bills," he said.
Economists say the study should be a wake-up call to Baby Boomers, who are virtually guaranteed to run out of money if they rely solely on Social Security and don't drastically cut back spending.
