Near-Retirees Worse Off

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By Robert Brokamp (TMF Bro)
May 15, 2002

You'd think that the extended bull market of the '80s and '90s would provide future retirees the most resplendent golden years in the history of society-sanctioned loafing. Makes sense... but it's not true.

According to Retirement Insecurity: The Income Shortfalls Awaiting the Soon-to-Retire (Adobe Acrobat Reader required), the prospects of households headed by someone between the ages of 47 and 64 are dimmer than those of previous retirees. The study, written by NYU professor Edward N. Wolff and published by the Economic Policy Institute, provided some startling statistics:

  • From 1989 to 1998, the percentage of near-retirees who will not be able to replace half of their pre-retirement income rose from 29.9% to 42.5%.
  • Almost one-fifth (18.5%) will live below the poverty level, up from 17.2% in 1989.
  • Retirement wealth declined 11% from 1983 to 1998 for households at the median.

The news isn't all bad -- if you're worth more than a million bucks. For households with a net worth of $1 million or more, retirement wealth increased. Everyone else saw a decrease compared to similar folks in 1983.

There are several possible reasons for this decline in retirement security: the demise of defined benefit plans (i.e., traditional pensions), lack of employee education, and low savings rates, among others. If you're worried about your retirement, here are some solutions:

  1. Save more.
  2. Educate yourself with a visit to our Retirement area.
  3. Enroll in our Rule Your Retirement online seminar (and actually write your own plan).
  4. Attend the RetireMint conference this Friday and Saturday in New York City (Fools can attend for free -- a $20 value -- by registering at www.retiremint.com/thefool/).
  5. Save more.

Robert Brokamp will be in New York City this weekend to discuss retirement, and concealing his bad breath with a RetireMint. The Motley Fool is investors writing for investors.