The Blubber

Just over half of Americans over the age of 65 are earning under $30,000 a year.

Living on meager incomes is already a reality for many Americans. Retirement, once seen as a time to relax and enjoy life, has become a distant dream for those hoping for financial relief in their later years. Some lawmakers are aiming to address this issue.

A recent report from Senator Bernie Sanders, the chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, sheds light on the grim future that awaits some older Americans and those aspiring to retire someday.

The report references the National Retirement Risk Index, which reveals that approximately half of households "will not be able to maintain their pre-retirement living standard." Additionally, 56% of low-income households and 45% of middle-income households are "at risk" of not maintaining their pre-retirement standards at age 65.

Even more concerning is that 73% of individuals in the lowest wealth group face a similar risk, compared to 28% in the highest wealth group.

"After a lifetime of hard work, Americans deserve to retire with dignity. But with our retirement system focused on increasing profits for Wall Street, a financially secure retirement is beyond the grasp of many workers. The time to change that is now," Sanders' report asserts.

The struggle of Americans to retire comfortably could have significant consequences. A 2023 Pew Charitable Trusts study suggests that as more households with older Americans become financially vulnerable from 2021 to 2040, state governments could face a $1.3 trillion shortfall. This could be devastating for retirees, leaving them financially strained and unable to afford healthcare or housing in their later years.

For some, the retirement crisis has already arrived. Just over half of Americans over 65 are living on incomes of $30,000 or less per year, according to the Census Bureau's Current Population Survey. Nearly 23% fall into the income range of $10,000 to $19,999.

Many Americans hoping to retire may not have retirement accounts to rely on. As of 2022, only 42% of Americans aged 75 and older held retirement accounts, and 51% of Americans aged 65 to 74 had retirement accounts, according to the Federal Reserve's Survey of Consumer Finance.

As noted in Sanders' report, around 10% of older Americans live in poverty, according to an analysis from the Center on Budget and Policy Priorities. Without Social Security income, approximately 38% of Americans aged 65 and older would be living below the poverty line. However, America's Social Security benefits are lower compared to many other wealthy countries; on average, benefits amount to 51.8% of workers' earnings across the OECD, but in the US, they are less than 40%.

Among the G7 countries, the US has the second-highest elder poverty rate, trailing slightly behind Japan, based on the OECD's definition of elder poverty as making less than half of the median income.