Retirement: The Fading Dream

1751d8cfd8e2e31a9f5a6e515c5cc51d

Most Americans today will never be able to afford to retire.  Period.  Retirement was a concept basically created in the 1950s, and a number of factors have come together to end the dream for the great majority of Americans.  The end of the dream in turn necessitates changes in how Americans live.  These changes will affect the economy and politics.  Arguably, they already are.

Here are some of the fundamentals:

  1. The average US household has $35,000 in funds at age 65.
  2. The average Social Security payment in 2016 is $1,341 per month.
    https://faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker
  3. According to Fidelity Investments, the average couple will encounter $245,000 in out-of-pocket health care expenses after age 65.
    https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise
  4. The Fidelity estimate excludes long term care costs.  According to Morningstar, we need to add 2.4 years of nursing home or long term care costs, at approximately $13,000 per month per person, to the Fidelity total.  Subtracting what Medicare covers of nursing home expenses, that’s roughly $347,000 per person.

Basically, the average person needs upwards of $800,000 in liquid assets to retire.

It’s pretty easy to see that these numbers don’t work for most people.  And that doesn’t consider the 10% of seniors who are caring for a grandchild.

So, how can the average person cope?  

  • They can work.  However, that takes jobs away from younger workers.  Job creation in the US isn’t strong enough to support both an influx of new high school and college grads and oldsters returning to work.  However, in this competition, older workers are handicapped as large corporations don’t like to hire them.  Seniors will return to the labor market at a much lower rate of pay than they had previously.
  • They can die at an earlier age.  In the US, low income males are doing that today, having lost 4 years of life expectancy since 2000.
  • They can deplete assets and let state aid contribute to covering expenses.  However, that means living one’s last years in extreme poverty.
  • They can move in with children.  The incidence of multi-generational families is on the rise.  That will change the kind of home buyers will want.
  • They can move outside the US to where health care is much less costly.  The number of US citizens who don’t live in the US is increasing,  with Central America as the destination of choice for emigres.

Several of these trends suggest that there will be a glut of single family homes on the market in the near future, with another round of declining home prices, underwater mortgages and foreclosures.

The growing volume of available labor may but a cap on wage increases, and increase deflationary pressure.

The fundamental problem is that today’s Americans reached adulthood with certain expectations about how their life would be.  Those expectations are being dashed, generating the anger that is playing out in the current election season.  The disappointment and anger is still in its early stages, and may get much worse.

8d7662cbfb04eed374117b5965b67f06

In this context, its rather amazing that so many people wanted to run for the Presidency this year.  The next four years are likely to be traumatic, and the next chief executive is likely to leave office after one term as a much hated individual.

About Crain Associates Research LLC

  • How we work for you
  • Who we are

CARLLC is a boutique research practice based in Princeton, NJ.  Our focus is on obtaining the best possible information for clients, and we use an array of primary and secondary data collection and desk research/meta analysis techniques to do that.

  • Methods

Surveys (phone, mail, web)
Depth interviewing (executives, doctors, consumers)
Focus groups
Statistical analysis (SPSS and R) and modeling
Forecasting
Scanning of public data sources

  • Advantages — Quality and Costs

As a boutique, we limit the number of projects we do each year in order to give each assignment the level of attention and effort it warrants.  However, as a boutique, we don’t carry a  corporate overhead burden.  So in most cases, we will offer a pronounced cost advantage over other full service research firms.

  • Examples of recent projects

Customer satisfaction, including CRM cleaning
Custom software development clients (enterprise IT executives)  — US,
India, China
Chemical products
Dermatology product users
Government logistics program managers
Employee surveys
Depth interviews with medical professionals (e.g., neurologists,
oncologists, hospital IT executives)
Depth interviews with large animal veterinarians