One in every six elderly Americans now live below the federal poverty line, and over half of all ‘baby boomers’ have reported a deterioration in their quality of life over the past few years[1]. 21 per cent of married couples and 43 per cent of single people over the age of 65 depend on Social Security for a massive 90 per cent of their income, and almost 62% of households headed by someone over the age of 60 are in debt[2]. 2.9 million older households in the US suffer from food insecurity[3], and between 1991 and 2007, the number of 65- to 74-year-olds applying for bankruptcy increased by a huge 178%[4].

Now, “25 million Americans aged 60 and above are economically insecure”[5], leaving them to struggle with housing, rising healthcare costs, nutrition, transportation, and savings. To make matters worse, they are often left isolated and alone, living in suburbs and surrounded by other elderly people, whose families have grown and flown the nest[6]

An Aging Labor Force – Working Until You Drop

With the increasing financial difficulties faced by the older population, many continue working long after the traditional retirement age, with 40% of ‘baby boomers’ claiming that they plan to “work until they drop”[7]. Of course, for some, this is a choice – a desire to continue in their current roles or even explore alternative career options, but for too many it’s a financial necessity. In the year 2,000, 4 million senior citizens continued to work after retirement age, but by 2017 that number had jumped to 9 million – the highest senior employment rate in 55 years[8]! In fact, it’s the highest senior employment rate since before retirees earned the right to healthcare and Social Security benefits in the 1960s.

To put further strain on older employees, the workforce is changing. Technology is becoming more and more prevalent, and senior employees are left to learn new skills or change the way they work[9]. This leaves some forced out of their jobs and as a result, many sell their properties, give up their lifestyles, and travel the country in search of seasonal work[10]. The Bureau of Labor Statistics (BLS) estimates that by the year 2022, workers aged 55 and above will make up a huge 25% of the labor force[11] and it doesn’t look like things are going to get any better any time soon. We’re failing our elders, and we need to do something about it.

The Dangers of an Aging Population

These shocking statistics are not pleasant to hear and inevitably, they lead us to ask some serious questions such as why is this happening, and why now? The truth is, this is nothing new. A quick Internet search will show you that talks of a retirement crisis and the financial struggles of senior citizens go back to at least 2013, if not further, and yet we’re still not doing anything about it. As to why it’s happening at all, there are a number of contributing factors – not least, the growth of population.

People are living longer than ever before and that is certainly having an effect on both the financial plans of the older generation and the way in which we react to these problems. In 2015, there were approximately 40 million senior citizens in the US, but it’s estimated that by 2050, this will shoot up to 89 million[12] and by 2035, one in three households will be headed by someone aged 65 or over[13]. What’s more, by 2050, the population aged 65 and above will outnumber those aged five and below by over 2 to 1[14].

With baby boomers living longer, they face a difficult decision: continue to work past retirement age in order to support themselves or worry about their dwindling savings. After all, only a meagre 23% of baby boomers think that their savings will last their entire retirement, according to a survey by the Insured Retirement Institute[15]. Larry Fink, CEO of the investment management company Black Rock, summed it up when he said that “[longevity] is one of the greatest financial challenges faced by our clients today”[16].

Pitiful Pensions

One of the other major factors in this crisis is that of pension funds, which have been rapidly decreasing in prevalence in recent years. In 1983, 62% of companies offered a pension plan. Now, just 17% offer the same service[17], and only 10% of companies offer life-long pensions[18].  These more traditional pension funds were managed by the employer and paid out a steady income after retirement, but the schemes are expensive to run, meaning that many employers have switched to a 401(k) scheme[19].

These employer-sponsored savings plans put the onus on employees to control how their money is invested through stocks and bonds, forcing them to plan their own finances through a minefield of confusing rules and regulations and a financial world that many simply do not understand[20]. Add to that the hefty penalties applied for early withdrawal, such as during times of financial struggles, and too many workers are left with a retirement savings plan that does not work for them and will leave them in poverty when they are older. A huge 71% of companies now offer 401(k) plans in place of more traditional pension funds[21].

This change in the pensions system – the shift of responsibility from employer to employee – has a lot to answer for, and many have argued that it has caused an even greater rich/poor divide. Now, the wealthiest 20% of over 65s own almost all the $25 trillion retirement accounts, while 401(k) plans leave the poorest groups confused and even deeper in poverty[22]. Labor economist Teresa Ghilarducci explains that it has meant “people are coming into retirement with a lot more anxiety and a lot less buying power”[23].

A Helping Hand

Legislation would certainly help matters – new regulations over pension plans, perhaps even compulsory contribution schemes to aid new generations as they enter retirement. In the meantime, though, we can all help a little. Consider your elderly relatives and watch out for senior citizens in your neighborhoods. Drop by and check they are okay now and then, and help them find the services they need to survive. And of course, we need to keep our own finances in check. 25% of Americans aged 46-64 have no retirement savings whatsoever, and 46% of all American workers have less than $10,000 saved[24]. It’s easy to think of our retirement as far away, and it’s hard not to dip into our savings when things get a little tough, but maintaining a strong fund of money for your retirement  and making the right investments will mean that your golden years really will be golden.

[1] Roland Reznik, 2016, 30 Shocking Facts About Senior Citizens in America, accessed 01.17.2018 

[2] National Council of Aging, 2018, Economic Security for Seniors Facts, accessed 01.17.2018 

[3] Ibid.

[4] Reznik, op. cit.

[5] National Council of Aging, op. cit.

[6] Allison Arieff, 2017, A Housing Crisis for Seniors, accessed 01.17.201

[7] Reznik, op. cit.

[8] Mary Jordan & Kevin Sullican, 2017, The new reality of old age in America, accessed 01.17.2018 

[9] Elena Holodny, 2017, America's next retirement crisis could be that baby boomers are living too long, accessed 01.17.2018 

[10] Jordan, op. cit.

[11] Kimberly Amadeo, 2017, Make Sure The Retirement Crisis Doesn't Happen to You, accessed 01.17.2018 

[12] Reznik, op. cit.

[13] Arieff, op. cit.

[14] Holodny, op. cit.

[15] Ibid.

[16] Ibid.

[17] Amadeo, op. cit.

[18] Reznik, op. cit.

[19] The Wall Street Journal, 2017, What Is a 401(K)?, accessed 01.17.2018 

[20] Amadeo, op. cit.

[21] Ibid.

[22] Jordan, op. cit.

[23] Ibid. 

[24] Reznik, op. cit.