I’ve been discussing the grim state of America’s retirement crisis for a long time now, and I often wonder if I’ll have good news to report at some point. However, the issue seems to be worsening. Based on this, could we have passed the point of no return, where we continually remain in a troubling retirement crisis? I personally believe the answer is yes, that we have surpassed any chance of recovering from this crisis. Of course, it’s possible that I’ve got it wrong, but since I’ve been following the retirement situation extensively for many years, I feel confident that my viewpoint on this is correct.
Will the Current Retirement Crisis Recover or Just Keep Escalating?
At this point, I just can’t envision a solid path that leads to the majority of the population owning prosperous retirement accounts. Or a way for 401(k)s to grow rapidly and keep an upward trajectory all while being unaffected by the turbulent economy. I also don’t see any plans in place to prevent Social Security from depleting its funds in the coming years. Alongside all this, I see post-pandemic goods and services still set at bank-draining prices that chip away at retirement savings as well.
I also see no clear signs that the government is capable of fixing the retirement crisis in any way, shape, or form. In fact, it’s clear their tactics are making matters worse. We should also take into account specific factors such as escalating healthcare costs and longer life expectancies that call for even more retirement funds than ever before.
I don’t mean to sound negative here, folks; I’m just being realistic about the financial situation retired people are in, as well as what’s in store for those planning for retirement the traditional way.
Some say we just need policy changes for improved savings mechanisms, or that the fate of the retirement crisis really depends on the collective efforts of policymakers, and financial institutions who need to address the issue. But in my opinion, we’re beyond that at this point, and the only answer is a totally different approach where U.S. citizens are not relying on Wall Street or the government to make way for building a reliable nest egg.
Ok, now that I’ve laid out the foundation of why I see the retirement crisis not recovering, let’s dig deeper into the supporting details:
80% of Older Adults Struggle Financially or Face Insecurity in Retirement
To grasp just how serious the situation is, a document drafted by the National Council for Aging (NCOA) with 2018 data compiled by researchers at LeadingAge LTSS Center @UMass Boston, stated that 80% of households with older individuals, approximately 47 million people, are struggling financially or are at risk of economic insecurity as they grow older. And as you can imagine, things have just gotten worse post-pandemic.
The NCOA also reported that even with an increase in income and household assets owned, older Americans still wouldn’t have enough money to support themselves through a financial hardship.
In addition to this, the NCOA concluded that 50% of U.S. citizens 60 years of age and older had household incomes that were below the average Elder Index for the location they reside in. What is the Elder Index? Well, it’s a measure of what aging adults would require to meet basic needs and still age in place with the dignity they deserve. It takes into account the basics, such as the cost of food, housing, transportation, healthcare, and other essentials. The NCOA also notes that according to the Social Security Administration, 65-year-olds today are predicted to live an additional 20 years.
Many Individuals are Trying to Live Off Their Insufficient 401(k)s
One reason many retired individuals are struggling is because they’re living off their 401(k), which was never meant to be a standalone retirement product. Let’s break this down a bit…
The average 401(k) weighs in at $134,000, so in reality, individuals would only have enough to live out about two years of their retirement. If their 401(k) was their only financial source for retirement, how would they fund the remaining years? Only relying on their 401(k) sounds a bit ridiculous, doesn’t it? However, the sad truth is that society has been brainwashed into thinking the 401(k) is the ultimate retirement fund. Because of this, those who are not very financially savvy don’t realize it’s not enough to retire on until it’s too late.
You don’t have to be one of those people though, you can get informed on the truth about the 401(k) by heading over to my article – Reasons Why the 401(k) is a Bad Investment Vehicle to Retire On.
Although having a 401(k) in place is not sufficient, what’s worse is that only half of U.S. households have a retirement account of any type. So, what are most of these individuals banking on to fund their retirement years then? The answer is…the Social Security Department.
Social Security is Running Out of Money Which Will Fuel the Retirement Crisis
With many people in a position to rely on Social Security checks either now or in the future, it goes without saying that when the Social Security Department is on shaky ground, there’s reason for concern. Even if the department is stable and running at full financial capacity, there’s still reason for concern for those who have no other retirement funds. Why is this the case? Because it’s just not enough to live off of these days. In fact, the average Social Security check is $1,920.48 a month – Raise your hand if your monthly rent is higher than that. And that’s just the average; there are many people out there who will receive much, much less than that.
A 2024 survey by Transamerica reported that one of the top five retirement concerns for the middle class was the uncertainty regarding Social Security. Catherine Collinson, CEO of Transamerica Center for Retirement Studies comments on this: “Our research finds that millions of Americans – tens of millions of Americans – are at risk of not being able to finance a secure retirement,” and Social Security is the No. 1 issue on people’s minds.”
Challenges Facing Social Security as Baby Boomers Retire
As more and more Baby Boomers retire and cash in on their benefits, the more financially unstable the Social Security department becomes. On top of this, Baby Boomers are reported as living longer than the generations before them, and the number of younger workers that are paying into the program is insufficient to keep the program running.
Along with this, by the time Gen X slips into retirement, they’ll be in bad shape if they don’t have an additional source of retirement income because Social Security benefits are set to run dry. At this time, which is in about nine years, the department will only be able to pay out what they are receiving from current worker’s paychecks. This will reduce retired individual’s benefits by 21%. So, if you think Social Security checks are not enough to live on now, they’ll be even more insufficient in the years to come.
If you’ll be retiring only on these benefits, you’ll want to be sure to read my post titled Retiring on Rental Income vs Social Security. I also highly recommend diving into my related article – 2025 Social Security Increase Likely to Fall Short.
Funds are Allocated to Care for Non-Citizens Instead of U.S. Retirees
To show you the path the government is currently on as its citizens struggle financially and older adults head back to work to make ends meet, I’d like to briefly touch on a few things. First of all, as our social security program is running dry, billions of dollars are being sent out of our country to aid foreign nations and the citizens of their countries.
This snippet from U.S. News paints the picture, “Israel said on Thursday it had secured an $8.7 billion aid package from the United States to support its ongoing military efforts and to maintain a qualitative military edge in the region. The package includes $3.5 billion for essential wartime procurement, which has already been received and earmarked for critical military purchases, and $5.2 billion designated for air defense systems including the Iron Dome anti-missile system, David’s Sling and an advanced laser system.”
The U.S. is Over 35 Trillion Dollars in Debt But Continues to Funnel Money Out of the Country
America is over 35 trillion dollars in debt and facing a national retirement crisis, so funneling money we don’t have out of the country makes no sense, but it does show you where our leader’s priorities are. You can learn more about how the U.S. government’s spending is out of control by diving into my post – National Debt Growing by $1 Trillion Every 100 Days.
On top of this, the U.S. is spending billions to fund non-citizens who are pouring into America. The government reports on this with the following press release: Department of Homeland Security Announces $380 Million in Additional Funding to Communities Receiving Migrants. They’ve spent way more than this already, though, complete with loading thousands of dollars on debit cards for non-citizens entering the country.
So, if you think the government has its focus on our aging population, and they’ll spend the money and time to fix this retirement crisis America is facing, just keep reading the news over the years and you’ll get a dose of reality. Here’s one place you can start that covers funneling money away from U.S. citizens – Stealing the American Dream – CA Proposes Zero-Down Home Loan Handout to Illegal Immigrants.
Build Wealth and Retirement Security with Rental Real Estate
Relying on Social Security, a 401(k), or other traditional methods of saving for your golden years may prove to be a costly mistake given that the retirement crisis appears hopeless at this point, especially with social security benefits set to run out in 2035. This all adds up to the fact that if you want to ensure you have enough to retire on, you’ll have to step outside the traditional retirement system and take matters into your own hands.
This may sound a little overwhelming, but trust me, it’s easy. I know this from experience because I actually left my day job to build wealth through rental real estate – no more relying on an employer, a 401(k), and certainly not on Social Security benefits.
You see, I built a substantial nest egg, one that will continually grow, year after year, as rent checks roll in like clockwork from multiple rental properties. It’s the most reliable way to build retirement wealth, a strategy that doesn’t rely on the government or Wall Street. Here’s some information I put together that details what I’m talking about – Why Rental Real Estate is a Smart Investment Vehicle for Your Retirement Plan.
How to Grow Retirement Funds Investing in Rental Properties
To create a plan to build wealth for your retirement fund, you’ll want to first find your Freedom Number – this is the number of properties that will cover all your expenses and allow you to become financially independent. You can download my free Freedom Cheat Sheet to calculate your numbers.
Oh, and the best part is if it’s all done right, you won’t have to wait until you’re in your 60s to retire; you can retire early if that’s a dream of yours. If it is, you’ll be interested in reading my article How to Retire Early Using Real Estate Investing.
If you’d like to start building wealth the right way, through lucrative cash flowing rental properties, be sure to schedule a complimentary call with the team at Morris Invest. We can take care of all the details for you when it comes to placing a property in your portfolio, along with placing a tenant for you so you’re cash flowing from the start. We can answer all your questions, discuss your investing goals, and tell you all about our available rental properties.
In the meantime, take a look at our power resources that can jumpstart your investment journey:
- 90-Day Financial Empowerment Bootcamp
- Fund & Grow (low-interest funding option)
- Morris Invest & SDIRA Program Overview
- The Financial Freedom Academy
- Property Downpayment Funding Strategy Ideas
For those of you who would like to increase your knowledge base and learn more about the topic at hand, I suggest diving into the following video titled The RETIREMENT CRISIS is here:
