Sunday, July 13, 2008
Accounting firm warns that most retirees will exhaust savings and reach destitution
Ernst & Young will release a study Monday indicating 60% retirees will run out of money before they die. Middle income Americans should reduce their spending by 24% to reduce their chances of winding up in poverty. The study anticipates that many Americans who retire at 60-62, as encouraged to do so by past corporate practice, could be destitute by 80. Particularly disturbing is the trend for corporations to freeze and eliminate defined benefit pensions.
Some seniors continue to work past 62 but in much more intermittent and lower paying jobs. Nevertheless, such jobs do tend to add to the principal that the senior will have to live on. Seniors who are able to enter jobs with higher earnings many find most opportunities are in commissioned sales of some kind and are likely to need good social contacts and skills, often through families.
The story is in The Washington Post on the Business Section front page today (F01), by Nancy Trejos, is titled “Many Retirees Faces Prospect of Outliving Savings, Study Says,” link here.
One disturbing trend is the rapidly increasing long lifespans as medicine can prevent cardiac arrest. At the same time, there are fewer adult children to care for them, and many of these may have moved away and some will not have experience in raising families or maintaining family continuity themselves.
The Ernst & Young website link for the study was not present this morning. I’ll check for it Monday.
The Washington Times today featured a "Voices" front page op-ed by Ed Feulner, "Social Security Deluge?" Besides making the usual "conservative to libertarian" arguments for privatization, it suggested eliminating benefits for the well-off, as well as upping the retirement age and perhaps denying the ability to retire "early" at 62. It's easy to imagine the moralism of such a proposal. I recall being approached to go to work to "make a lot of money" as a retiree selling things, including bad mortgages. I declined. I started the benefits at 62. I might not have the luxury of doing what Feulner thinks is "right" if his recommendations were followed. Link is here.