Some 69% of those aged 55-65 agreed that retiring at age 65 “doesn’t apply to them.” 22% reported that in the last 12 months, they’ve decided to retire later than planned. More than 40% believe that they will have to keep working during retirement to make ends meet.

Inflation is one culprit behind the pessimism. 42% said the rising cost of living has affected their spending habits, with 27% saving less for retirement as everyday spending consumes more of their income. More than half of respondents expect that inflation will hurt their retirement portfolios.

Over the years, many observers have worried about the transition away from employer-provided pensions, toward enabling employees to save for their retirement in 401(k) or 403(b) plans. With a pension, the transition to retirement is somewhat seamless, as the regular payments take the place of the earlier salary in the household budget. Not so with a lump sum accumulated in a tax-deferred plan. How much in savings will be enough for retirement? How much can be withdrawn each year? How should it be invested? The questions are daunting, there are no easy answers. Will retirement turn into another kind of work?

On the optimistic side, writing for Morningstar, John Rekenthaler asserts that “There’s No Retirement Crisis” [April 29, 2024]. He reached that conclusion by examining the changes in relative incomes for each population cohort since 1994. The data is from the U.S. Census Bureau. Over the last 30 years, real, after-inflation income has grown by 42% for those age 65 -74, and by 33% for those 75 and older. For comparison, the average income of those 45 – 54 has grown only 17% above the inflation rate. What’s more, these figures do not include the 2023 8.7% increase in Social Security benefits.

So there is no retirement crisis yet, according to Mr. Rekenthaler. But he does conclude with a different caution about global demographics. “The world is becoming older rather than younger. That shift will have profound implications, including with retirement funding.”

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