Report finds retirees feeling stretched financially
Report finds retirees feeling stretched financially
It’s becoming more common for people who are retired to feel like they don’t have enough money to live comfortably. Nearly a third of retirees feel like they’re spending more than they can afford, according to a new report from the Employee Benefit Research Institute. That’s almost double the percentage who said that in 2020.
The last four years have been a bit of a rollercoaster.
“We had a huge pandemic. It was traumatic for so many people and their jobs and the economy,” said Mark Iwry, a non-resident senior fellow at the Brookings Institution and visiting scholar at the Wharton School.
He said the economy has bounced back well, “but many people are still hurting.”
Especially many older adults who retired earlier than they planned, said Bridget Bearden, research and development strategist at the Employee Benefit Research Institute.
“Many of the retirees that we spoke to experienced a decline in their standard of living,” she said.
Inflation is part of the reason.
Teresa Ghilarducci, an economics professor at the New School for Social Research, said the biggest increases were on things that retirees spend most of their money on: food, shelter and medical care.
People are also carrying a lot more debt. Two years ago, 40% of retirees had outstanding credit card debt. Today, it’s 70%.
“And we’re finding more and more retirees with larger and larger mortgages,” said Ghilarducci. “And we also see a significant number of retirees who are still carrying student debt.”
Some of these factors are new or getting worse.
But Alicia Munnell, director of the Center for Retirement Research at Boston College, said the basic reality has been true for years.
“That somewhere between 40% and 50% of people who are entering retirement are not going to have the kind of money that will let them spend the way they spent before,” she said.
One of the biggest issues is that nearly half of people never work a job that offers a retirement plan and others only do for part of their career.
Munnell said that needs to change.
“Continuous coverage is really the most important thing that we can do to improve the whole retirement situation,” she said.
That, and fixing Social Security.
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