10 reasons we must urgently get over our retirement crisis denial   

Despite America’s intensifying retirement crisis, some conservative economists are engaging in a disturbing response — retirement crisis denial, insisting there is nothing to worry about, despite reams of evidence to the contrary.

This wave of denial comes as reports abound showing millions of American elders in poverty, and many millions more lacking the savings or retirement plan needed to survive comfortably in old age, as a report by Sen. Bernie Sanders (I-Vt.) documented. 

Black Rock CEO Larry Fink made headlines with his 11,000-word warning to shareholders that, “nearly half of Americans aged 55 to 65 reported not having a single dollar saved in personal retirement accounts,” according to U.S. census data. “Nothing in a pension. Zero in an IRA or 401(k).”

“It’s no wonder younger generations, Millennials and Gen Z, are so economically anxious,” Fink added, ominously. “They believe my generation — the baby boomers — have focused on their own financial well-being to the detriment of who comes next. And in the case of retirement, they’re right.”

In the face of all this, an American Enterprise Institute (AEI) economist recently argued in The Wall Street Journal that “You don’t have to be a millionaire to retire,” insisting, “Most retirees report that they’re doing fine” in surveys. A Heritage Foundation economist testified at U.S. Senate hearings, “Official poverty rates among older Americans (ages 65 and higher) — both historically and compared to the rest of the population — do not indicate a retirement crisis.” 

The economist leans heavily on responses to the Federal Reserve’s Survey of Household Economics and Decisionmaking, in which 49 percent of respondents aged 65-74 said they were “living comfortably.” 

But even this hopeful number is problematic: How long will they live comfortably? Have major medical and care expenses hit home yet? Do some not want to complain? 

Meanwhile, more than half of America’s elderly are not living comfortably — 51 percent report they are “just getting by,” or “doing okay,” or “finding it difficult to get by,” not exactly a vote of confidence or security.

In their “don’t worry” confidence, these conservative economists leave out the vast research detailing widespread and serious economic precarity among older Americans, undermining both retirement and basic economic security. 

How is it not a crisis when, at minimum, more than 10 percent of America’s elderly people aged 65 and up — more than 5 million, likely around 12 million — are in poverty? Why deny or dismiss the crisis? The most likely motive is to blunt rising support for improving pensions and Social Security.

Whether the deniers want to admit it or not, America is experiencing a retirement crisis. Here are 10 reasons that make that clear. 

1. One out of every 5 American households aged 55-64 has less than $100,000 in total wealth and no defined benefit retirement plan, according to our analysis of Federal Reserve Board data. That’s counting everything: transaction accounts, CDs, investment funds, bonds, stocks, whole life insurance, managed assets, retirement accounts, any vehicle wealth, any real estate and business wealth, lines of credit, credit cards, student loans and other debts.  

2. At a minimum, more than 10 percent of Americans aged 65 and up are in poverty, according to official U.S. measures. Meanwhile, relative poverty data from the Organization for Economic Cooperation and Development show a worse picture, estimating that 23 percent of U.S. elders are in poverty — meaning they live on just 50 percent of the U.S. median income, about $23,200 a year. Research shows that’s not nearly enough for most people to retire on in any comfortable, secure fashion. 

3. Amid these economic fragilities, costs for long-term elder care are soaring. The average American turning 65 today will incur $120,900 in future long-term services and supports paid care — but this does not cover the costs of all their care as many will end up supplementing with unpaid family care, so the real price tag is much higher. Long-term care can cost anywhere from $20,280 a year for community services like adult day care to $108,405 for a private room in a nursing care facility. Most Americans say it would be impossible or very difficult to afford one year at a nursing home (90 percent) or a year of assistance from a paid aide (83 percent). 

4. Up to 40 percent of middle-income workers are at risk of downward mobility into poverty or near poverty in retirement, because of an inefficient retirement system that disproportionately benefits those with high incomes. Our analysis shows that, due to the systemic flaws of our retirement system, the number of poor or near-poor people over the age of 62 will increase by 22.3 percent between 2019 and 2045 — rising from 18 million to 21.3 million.

5. Roughly half of Americans (49.4 percent) aged 55-64 say they could not afford an emergency of more than $2,000; our analysis of Federal Reserve survey data shows that 38.2 percent can’t afford an emergency of $1,000. 

6. The American pension system is in severe long-term decline, and now ranks 22nd out of 47 countries, getting a barely passable C+ on the prestigious Melbourne Mercer Global Pension Index. This internationally recognized index rates the U.S. low in terms of the adequacy of coverage and retirement benefits, financial sustainability and the integrity of regulatory and governance systems.

7. Due to financial pressures and inadequate retirement savings, 1 in 5 seniors claim Social Security before their full retirement age, thus losing up to 30 percent of their full benefit, according to research by the Schwartz Center for Economic Policy Analysis.

8. Millions of Americans aged 65 and older are stuck in jobs that are physically demanding, and sometimes dangerous, harming their health and undermining their ability to retire. Our research shows that more than 25 percent of older white workers and over 40 percent of older Black and Hispanic workers toil in physically demanding jobs. Meanwhile, others who need to keep working are pushed out: Among workers aged 55-64, the rate of involuntary retirement is 54 percent, while 45 percent for workers 65 and older are forced out prematurely. Our research shows these trends are connected: Often, older workers are pushed into retirement due to deteriorating health from physically demanding and dangerous work. 

9. Retirement anxiety and uncertainty are widespread among U.S. elders. When asked, “Do you think your retirement savings plan is currently on track?” 46.9 percent of people aged 55-64 and 39 percent aged 65-74 say they are not on track to retire, according to our analysis of the Federal Reserve’s Survey of Household Economics and Decisionmaking. 

10. Retirement income has flatlined for the last 20 years while expenditures have shot up. According to our analysis of the Consumer Expenditure Survey conducted by the Bureau of Labor Statistics, inflation-adjusted median retirement income only increased by 1 percent between 2004 and 2022. Over the same time, the inflation-adjusted median expenditure for Americans 65 and older shot up by 29 percent.

The retirement crisis is even worse than conservatives’ numbers seek to suggest. Economists at the Heritage Foundation and the American Enterprise Institute rely on averages that significantly downplay the crisis. Those averages are elevated by the top 10 percent in income and retirement wealth groups. By emphasizing average incomes, wealth and retirement savings, conservatives diminish and dismiss the extent of the crisis. 

Instead of playing numbers games to deny or dismiss America’s retirement crisis — which does a disservice to the realities older Americans are facing — we need solutions. We can start with the Retirement Savings for Americans Act, a bipartisan, bi-cameral bill that would expand retirement plans to private-sector workers who don’t have any coverage. Modeled after the successful federal Thrift Savings Plan, the act features automatic enrollment, portability, good investment options, sensible deaccumulation and a 5 percent government match for eligible savers. 

America’s retirement crisis is all too real, multilayered and affecting millions of older Americans who are either poor, near poverty, or who lack the resources for a stable retirement after a lifetime of hard work. 

Christopher D. Cook is a senior writer for The Schwartz Center for Economic Policy Analysis (SCEPA). Teresa Ghilarducci is a professor of economics at The New School for Social Research and author of “Work, Retire, Repeat.”SCEPA researchers Drystan Phillips, Jessica Forden, and Karthik Manickam contributed to this article.