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4 Jaw-Dropping Stats About Retirement

By Jason Hall - Apr 4, 2016 at 7:22PM

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You'd better hope you don't match up with these retirement stats.

Close your mouth. Make sure you're in better shape than the average. Image source: Flickr user Nigel

The American ideal for retirement is based on financial freedom and independence. For some retirees, that means being able to travel. For others, it's the opportunity and means to pursue a lifelong passion. For many more, it's the chance to finally slow down. 

Unfortunately, a lot of retirees will find out too late that they weren't prepared for retirement after all. Here are four startling stats about retirement that you'll want to know if they apply to you.

1. Retiree debt is rising
Ideally, retirement is a time when you don't have to worry about bills, especially the big ones such as mortgage and car payments. Unfortunately, the trend for millions of Americans over 65 is going the wrong way. According to a study by the Consumer Finance Protection Bureau, the number of Americans 65 and over with a mortgage has skyrocketed in recent years:

Image source: Consumer Finance Protection Bureau.

While the percentage of homeowners over 65 has held steady, the number with a mortgage has shot up. In real numbers, this means that about 3 million more of today's 65 and over crowd now have a mortgage. 

And we aren't talking about just carrying the mortgage over an extra year or so: The median mortgage debt has nearly doubled to $79,000. Even more concerning is the debt carried by those 75 and over, with 21% of that group of homeowners still paying a mortgage, nearly triple the 2001 level. 

Mortgage debt for retirees cuts two ways. First, those monthly payments eat into the fixed income most retirees depend on, leaving them with less to spend on necessities like food and healthcare (which studies indicate retirees with mortgage debt spend less on) versus their lower-debt counterparts. 

Second, many older retirees come to depend on home equity as a source of income, something a mortgage eats away at. The average older American with a mortgage had a debt-to-value ratio of 46% -- up from 30% in 2001, meaning that much less home equity available for a reverse mortgage or as proceeds if they sell and downsize. 

2. Retirees are way behind on savings
According to Vanguard's annual "How America Saves" study, which analyzes the retirement accounts that it manages for nearly 4 million Americans, the average near-retiree doesn't have nearly enough saved:

Average Retirement Account Balance by Age
AgeAverage BalanceMedian Balance
55-64 $186,404 $76,618
65+ $208,158 $72,845

Data source: Vanguard "How America Saves" 2015.

The typical retiree will need several hundred thousand dollars saved up in order to maintain their pre-retirement lifestyle. And keep in mind that these averages are heavily skewed by Vanguard's wealthiest clients, who have saved up many times more than the ordinary American. The median, which is the number in the dead center of all savers, is a better representative of what more people are likely to have. And with the average American retirement lasting about 18 years, it's enough to provide less than $6,000 per year in consistent income. 

That's not enough to pay for retirement, even when paired with Social Security, as you'll see next. 

3. Retirees lean too heavily on Social Security
If you fall near the median range above, don't expect Social Security to bridge the gap completely. According to the Social Security Administration's "Fast Facts" for 2015, the average benefit paid to retired men was $1,488 per month in Dec. 2015 and $1,167 to retired women on their own work record. The average spousal benefit paid to women on their husband's work record was $680 per month and $520 per month to men on their wive's work record. 

Image source: Social Security Administration.

The point is that Social Security's average payout won't make anyone rich -- and it may not even cover basic living expenses. It was only designed to supplement private pension and retirement savings. Unfortunately, millions of American retirees use it as a primary -- sometimes only -- source of retirement income. 

4. Most retirees will need high-priced long-term care 
According to the U.S. Department of Health and Human Services, an American turning 65 today has a nearly 70% chance of needing long-term care at some point in their lives. And while long-term care encompasses many things, it generally means things that medical insurance and Medicare simply won't pay for. 

Here are several key data points about the elderly and long-term care:

  • The average man will need 2.2 years of care; the average woman 3.7 years (mainly because women tend to live longer).
  • The average caregiver spends 20 hours per week providing care. 
  • 80% of care is provided by unpaid caregivers, primarily female family members. 
  • 65.7 million Americans provided unpaid family care in 2009. 

Unfortunately, much of the care that family members provide happens simply because it's the most affordable option, not because it's the best choice. Medicare, for example, will pay for skilled medical care such as nursing or rehab, even in a facility in many cases. But it won't pay for unskilled services, including help for bathing, dressing, or preparing meals. 

Considering that costs for care can easily exceed $40,000 per year for some in-home services and double that amount for assisted living and nursing facilities, that's why much of this care is provided at no charge by family members. 

Get prepared 
The stats above can be scary if you're not prepared. The good news is, if you're still working, you can take steps today to get your retirement plan in order, whether it's cranking up your retirement savings, paying down debt, or exploring ways to make sure your family isn't burdened if you require long-term care. 

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