(Epic Economist)—Do you know that 80% of households with older adults are not only struggling financially today but are at risk of falling into economic insecurity as they age?
However, the trend is still worsening over time. About 90% of these older adults have seen a decrease in their income, which puts the retirement crisis at a high rate. But the question remains: what is the solution to this retirement crisis? How do we manage it?
The U.S. retirement system has not only become more of a savings system but less of an income system. And this has resulted in a big risk! Workers will outlive their savings.
But here is the truth: The majority of older households that are approaching retirement simply are not financially prepared.
The most important measure that shows you are financially ready is your ability to replace working income after you retire. But that is far from what most Americans do because they hardly maintain their standard of living.
As a rule of thumb, most people will need to replace at least 70% of their wage income in retirement. Notwithstanding, those who have not been able to save much for retirement will depend solely on Social Security, which will typically replace only about 40% of pre-retirement income.