A new report from AARP shows that the majority of boomers (age 45-64) in Washington state are worried about their future finances in retirement.
In the report, over half of respondents reported anxiety when thinking about their future finances, with women (64%) reporting a significantly higher level of anxiety than men (48%). Many of the respondents who reported they were anxious about retirement had less than $200K in retirement savings.
Four out of five respondents also wish they had saved more money for their retirement years, but many of them reported a lack of extra money to put toward savings. More than half said their reason for not saving more for retirement was “I don’t earn enough to save more,” “I can’t afford to save more,” or “I’m paying down debts.” More than one-third reported high medical costs as a reason they haven’t saved enough.
Perhaps one explanation for the high degree of retirement anxiety is a lack of access to workplace retirement savings plans. The report shows that just four in ten are contributing to a workplace savings plan such as a 401k or 403b. Fewer than half have a personal IRA or investments in the stock market.
The likelihood of saving for retirement – and perhaps access to a workplace retirement plan – is related to educational attainment. Half of those with a four degree reported contributing to a workplace savings plan, compared to just 29% of high school graduates or less. It would also appear saving for retirement is directly related to one’s financial ability: 55% of those earning more than $75K put money away via a workplace plan, compared to 4% of those earning <$25K.
It’s clear that middle class retirement security is in jeopardy as guaranteed pensions disappear and wild swings in the stock market wreak havoc on the savings of those nearing retirement age. Restoring a sense of financial security to retirees and near-retirees starts with shoring up Social Security by eliminating the exemption on income above $113,700 (scrap the cap), and ensuring proposals to cut benefits and further raise the retirement age are tossed in the dumpster of terrible policy proposals.
Social Security didn’t miss a payment during the depths of the recession or make bad investments that left retired seniors with pennies on the dollar. Social Security works, and it’s well past time we expand and improve it.