Why Retirement Is Out of Reach for Many American Workers

Theresa Edwards thought these years would be her golden years. Instead, she rises at dawn to travel by bus across Los Angeles to work as a nursing assistant. At the end of a long day, her last patient is waiting for her at home: her husband of 55 years, who is recovering from a serious car accident.

Edwards began caring for others at age 18, when her grandmother was diagnosed with Alzheimer’s. At 74, she tires more easily. Sometimes she needs to stop and catch her breath. But taking a break isn’t an option.

Every dollar counts. Edwards doesn’t buy new clothes or get her nails done. She doesn’t have a credit card and puts every penny she doesn’t spend on bills into a savings account.

Yet she barely makes enough money each month to pay for groceries, electricity bills and the $1,500 rent on her two-bedroom apartment, which also houses her four grandchildren and 9-year-old German shepherd, Duchess.

“I bless Jesus and God that I am as strong as I am at this age,” she said. “Sometimes I wish I could stop working. But the way life is going, I’m not sure I will.”

Retirement is increasingly becoming a luxury that many American workers can’t afford. With rising housing and medical costs and the absence of the pensions that supported previous generations, millions of older Americans can’t stop working.

Social Security, which pays less than half the average wage and is at risk of benefit cuts, is not broad enough, and many older Americans don’t have enough money set aside in savings or 401(k) accounts to get by.

In fact, only about half of American households have retirement accounts, according to the federal Survey of Consumer Finances.

Many Older Americans Can’t Stop Working at Retirement Age

For decades, the combination of pension plans – defined benefit plans – and Social Security has allowed many people to enjoy a dignified retirement.

Not today. A study by Teresa Ghilarducci, a labor economist and professor at the New School for Social Research, shows that only 10 percent of Americans aged 62 to 70 who are retired are financially stable.

Most older Americans are either retired and living below the standard of living they had when they were working or they cannot afford to stop working, according to data analyzed by Ghilarducci from the University of Michigan’s Health and Retirement Survey.

“One in two people reaching retirement will not have enough money and one in four elderly people live in poverty by international standards,” Ghilarducci said.

“The retirement savings crisis in the United States is no longer imminent; it is already here,” reads the opening sentence of a recent report from the National Institute on Retirement Security.

“We’re a long way from where we need to be,” said Dan Doonan, executive director of the National Institute on Retirement Security and one of the report’s authors.

“I never imagined I would find myself in this situation”

Older Americans like Robin Delucia face a frightening and once unthinkable prospect: They will be poor for the first time in their lives.

Delucia, who has been working since she was 14, retired on her 70th birthday. But she says she couldn’t stay retired.

After taking a two-month RV trip to New York with her 10-year-old dog, Midnight, she returned home to Sarasota, Florida, to look for work.

“It’s the only way I can keep living,” she said. “Living on Social Security today is a joke, especially in Florida.”

For most of her life, Delucia lived comfortably. She worked as a real estate agent, loan officer, and mortgage loan officer before owning her own marketing company. Then her health deteriorated and she could no longer work full time. Over the past 20 years, she has undergone 15 surgeries.

For a while, Delucia had to pay her credit card bills, until she could no longer keep up with her payments and was forced to file for bankruptcy. She owed $18,000 on a car valued at a quarter of that amount.

She used to own a house. Today, she lives temporarily in a “shed” behind her daughter’s house.

Delucia wants to create a Facebook page for people 62 and older and a nonprofit that serves as a housing connection, connecting older Americans who need help paying their rent or mortgage with those who need a place to live.

“I never imagined I would find myself in this situation,” she said.

“Work, retire, start again”

Ghilarducci, author of “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy,” blames the shift to 401(k)s for the retirement savings crisis.

These “do-it-yourself retirements” have left a growing number of low- and middle-income Americans stranded, forcing them to work well into their 70s, she said.

Some influential people are beginning to agree with her.

Larry Fink, chairman and CEO of BlackRock, one of the world’s largest asset managers, warned that the “you’re on your own” approach has moved Americans from “financial certainty to financial uncertainty.”

He points out that 4 in 10 Americans don’t have $400 in emergency savings to cover a car repair or an emergency room visit, let alone their retirement savings.

“Perhaps once a decade, the United States faces a problem so serious and urgent that government and corporate leaders stop acting as if nothing is happening,” he wrote in March. “America needs an organized, high-level effort to ensure that future generations can live out their final years with dignity.”

Retirement crisis set to worsen for millennials and Gen Z

Without intervention, the retirement savings crisis will only worsen as more Americans reach retirement age, said Kevin Prindiville, executive director of the nonprofit Justice in Aging.

“If we do not act, future generations will face an even more difficult retirement environment,” Prindiville said.

Young people are already reeling, especially those with unstable employment and incomes.

Angel Herion, 23, said she was eager to start saving for retirement.

Herion, who describes herself as a dynamic person, started working as a teenager. After graduating from high school, she dreamed of a career in medicine and earned a license as a certified nursing assistant. But when her elderly adoptive mother became ill, Herion became her caregiver.

When her mother, her only family, died after a long illness, Herion suddenly found herself alone. Her nursing license had expired and she had no savings, so she worked her way up in fast food and retail.

She was thrilled to land a job as an assistant manager at Macy’s on Long Island in 2022. She loved her team and customers. It was also the first job that offered a 401(k).

Then she got sick. At age 22, Herion was diagnosed with a debilitating and painful autoimmune disease that leaves her unable to get up and move around.

Today, she lives on welfare and is looking for work from home. She spends the money she has on medication. Saving for retirement is a dream she has had to postpone indefinitely.

“I wish there were more retirement options,” she said. “A lot of times, you can’t even afford to pay into retirement because you’re struggling to make ends meet.”

3 Simple Tips for Saving for Retirement

Save early and regularly: Set aside 5% of your take-home pay in your 20s and 30s, and 10% for the rest of your working life. “If you do that and leave it alone, you can supplement Social Security and maintain your standard of living,” Ghilarducci said. “The sooner you do it, because of the power of compound interest, the better.”

Invest wisely:Be a smart investor, she said. Don’t ask friends and family for stock advice or hire an expensive money manager. Maintain a balanced portfolio in a retirement savings account with a company like Vanguard.

Pay attention“We forget how important the federal government is to our financial future. For most people, the bottom 90 percent, the federal government is the most important financial player,” Ghilarducci said. “So you really have to pay attention to where politicians stand on Social Security, Medicare and Medicaid.”