The World Economic Forum defines the “retirement crisis” as the gap between what working households need and what they have. According to Forbes magazine, a World Economic Forum study shows that the six largest economies in the world, the United Kingdom, Canada, Australia, China, India and the United States face a savings gap.
Some observers say the U.S. savings gap—$7.7 trillion in 2013—is a train wreck ready to happen. According to Forbes, for some state and city governments in places such as Dallas, New Jersey and Illinois, the gap is so large they will have to make politically difficult choices concerning benefits or taxes.
A Fidelity study found that 55 percent of those interviewed are at risk for running out of money before their lives end, and they aren’t prepared to run out of money before their lives end.
Robin McGill, 66, a retired teacher living on Staten Island, told the AmNews that it is difficult because of the constant changes in the economy to know if you have saved enough money. “I have a pension because I worked in the public sector for 28 years—retired now for the past seven years—but the cost of things keeps going up,” McGill said. “What looked good to me when I first retired ain’t looking so good now. For example, a five-pound bag of sugar was $1.50. A four-pound bag now costs $2.50 if you are lucky enough to catch a sale.”
The Washington Post calls it “the new reality of old age.”
Analysts say that many businesses no longer offer pensions, forcing retired workers to rely on their savings and Social Security, which only replaces 40 percent of a person’s pre-retirement earnings.
Acåcording to Forbes, “Most people will have little more than Social Security, will have inadequate balances for retirement savings and will be relatively worse off than their parents and grandparents. Retired baby boomers make up more than 20 percent of the population and have anemic buying power.”
Robert McClain, 69, retired as a union construction worker. He explained that he rents a private house in Brooklyn. “I get a pension and Social Security, which just pays my rent and allows me to buy some groceries,” he said.
McClain admits that he has no idea what will happen 10 years from now. “Depends on your lifestyle,” he said.
Forbes says that in 2017, one in five Americans older than 65 were still working and one in five had no savings.
“You must learn to budget—adopting the rob Peter to pay Paul mentality,” McGill said.