The entrance into retirement age should be the entrance into an era of comfort and ease. However, staggering numbers show that the next generation to enter retirement age is the least prepared in decades.
With a salary that has not been increased in years, a high average debt amount and a weak 401(k) plan, to say that this generation is living paycheck to paycheck would be an understatement. Close to half of those households close approaching retirement age are unable to maintain their standard of living into retirement. The WSJ reports that this equates to a shocking 5 million Americans.
The impact of this ripples across generations, as young adults will have to work to support the elder generations. Additionally, it means that while these elders are entering retirement age, many will continue to work well into their 70s. This is unheard of as life expectancy has reached a peak high, the age of these workers are higher than ever.
The continuing increase of the cost of living in conjunction to limited funds have left these older Americans scrambling, not to mention pension cuts, high healthcare costs and rising premiums.
Many are looking to 401(k) plans as the culprit of this crisis. Baby boomers have been the first generation to utilize their 401(k) account as a means to save for retirement. 401(k), which was introduced to the American public in 1978 after a pension retreat, has gotten hit hard during market crashes. The WSJ cites examples of retirees losing ¾ of their savings in 401(k) plans to market crashes. The shortcomings of 401(k) accounts are slowly being recognized by Americans but it may be too late for these boomers. It is up to the next generation to invest their savings in something that will actually produce wealth accrual - Real Estate.