The Most Alarming Truth About the New Retirement
Business + Economy

The Most Alarming Truth About the New Retirement


The Employee Benefit Research Institute (EBRI) has published its annual Retirement Confidence Survey, which confirms what virtually all such surveys have concluded: 1) Americans are living longer; and 2) They do not have anywhere near enough saved for retirement.

The sad truth is, Americans do almost no thinking about what kind of retirement they want. They mistakenly assume that Social Security is a retirement program, when in fact it is a supplemental retirement program.

The three legs of the retirement "stool" – Social Security, a pension, and private savings – have all seen some shrinkage in the past few years.

For Social Security, all baby boomers know the truth: We are going to be working longer, into our 70s, paying more and getting less. Pensions are going away: International Business Machines stopped providing pensions to new employees a couple years ago, and many are facing reductions in their benefits.

And private savings?

To quote from the EBRI survey: 57 report having less than $25,000 in household savings and investments (excluding their home and pension benefits).

This is for all workers, so older workers would have more money, but other surveys show the results are equally paltry.

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This is just the tip of the iceberg. American households are so strapped that only half could come up with $2,000 in cash if an unexpected need arose in the next month.

You would think that savings levels would increase, but no: The percentage reporting saving anything for retirement is at 66 percent, down from 75 percent in 2009.

People are also living much longer than their parents: A male reaching retirement age in 2013 is expected to live to an average of 85, a woman to 87.

What this means: A retirement crisis is looming. In a little more than a decade, there will be a lot of older people who will run out of money.

There will be stories written in the year 2025 about Joe Smith, 82, a retired auto worker, living in a flophouse on $2,100 a month in Social Security after his pension was cut off and his personal savings ran out, while his children, in their 60s themselves, moved 2,000 miles away. 

This article by Ben Pisani of CNBC originally appeared at

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