The Growing American Retirement Crisis

Retirement Crisis

For generations, parents across America have answered the complaints of their children with something that started with, “Back in my day…”. In fact, just the other day my girls, Phoebe and Sophie, and I were “playfully” arguing about whether it’s more difficult growing up these days or back when I was a teenager. I pleaded my case about the hardships of my youth (I didn’t have an iPhone after all!), and they came back at me with the modern challenges they face. And while I teased that I walked five miles to school and back, uphill both ways – in the snow, of course – I certainly agree that their generation will encounter things that I never faced or maybe even thought of.  

But you know, it got me thinking about how times have changed and how different generations have to deal with their own advantages and difficulties. This is true of whatever phase of life you are in. In fact, I look at what many people in my generation are experiencing as they see their retirement on the horizon. Retirement used to be something people dreamed about.  Things such as not waking up to an alarm clock, less responsibility, my time is my own, pursue that hobby all become the focus of your life.  Things that may have been put on the back burner of life, now become center flame.  But for a rapidly growing group of Americans these days, the approach of retirement creates fear and confusion. Retirement is no longer about getting your gold watch, collecting a pension and sitting in your rocking chair on the front porch, waving at the neighbors as they walk by.

The sad fact is that many people have no retirement or long-term care plan. For others, their retirement plan is based on unreasonable expectations or assumptions, more of a hope-and-prayer approach than a real plan; a real system. With pensions disappearing and the responsibility of funding your retirement falling primarily on your own shoulders, many believe we may be facing an impending national crisis. Get this, a survey by the Transamerica Center for Retirement Studies found that only about half of all Americans have a thought-out plan for their long-term care needs. Many of those with a plan are looking to spouses, children, or friends to fill a significant part of their long-term care needs.  Unfortunately, many of those looking to spouses and family probably aren’t considering that a care-giving spouse may be in their 70’s or 80’s when their help is needed the most. They also have to consider the potential awkwardness of having their adult child help them with personal care like bathing and incontinence. All of this coupled with the fact that as many as 70% of those who do reach the age of 65 will need some sort of long-term care assistance.  

Another frightening fact is how little the average person has set aside to fund their retirement. According to the Transamerica survey, the median household retirement savings for men is $69,000, for women surveyed it’s a mere $28,000. In the new era of disappearing pensions and greater longevity, as well as an uncertain future of Social Security, even those who won’t need long term care may struggle to cover their basic expenses in retirement at today’s savings rates. Among those answering the survey, nearly two out of five men said they would continue working during retirement and over a quarter of all women said they would work in retirement as well.

While being a woman approaching retirement may look particularly daunting, the same could be said many in younger generations. Generation X, or the “lost generation,” born between 1965 and 1980 has saved less than half of what the typical baby-boomer has saved towards retirement. Maybe this isn’t surprising considering the amount economic volatility the Gen Xers have seen during their prime earning years – such as in the difficult early 1990’s, right as many of them where establishing their careers – all the way through to the Great Recession and now COVID.

The approaching crisis may even be worse when you consider that Transamerica gathered most of the information in late 2019 and early 2020 prior to the emergence of COVID. The reality is that the retirement crisis was already a growing problem and COVID is just adding fuel to the fire.

Unfortunately, the significant diverseness of national politics hasn’t done much to help those moving closer to retirement. The current “system” was built for the days when workers would spend long stretches of their career with one or two large companies or corporations, earning a pension that, combined with Social Security, was more than sufficient to retire comfortably. Until the system is changed and our politicians decide to treat retirement as the national crisis it is, folks need to do their best to address the issue at a personal level. This means creating some sort of “system” of your own to maximize your money where you can and increase funds for retirement, while protecting yourself from future market crashes with a downside risk mitigation system. 

Is this a hopeless endeavor? While I have painted a fairly grim picture here this week, I absolutely have confidence in the future of my generation and those who will follow. We just need to realize and accept the need for a thoughtful and disciplined approach to preparing for our retirement. It won’t happen on its own, but if you’re willing to take the time and make some sacrifices, everyone can take steps to improve their retirement prospects. 

So as always – be vigilant and stay alert, because you deserve more!

Have a great week.

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, Mansfield & Southlake, TX. Jeff can be reached at

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