America’s senior population is growing rapidly. The Administration on Aging reports people 65 or older comprised 12.4 percent of the population in 2000. By 2030, seniors could represent 19 percent of the population.
This sudden aging of the population is due partly to the fact that tens of millions of baby boomers are retiring. In addition, modern seniors are enjoying lifespans significantly longer than previous generations.
The US is going to face some significant challenges as the population ages, including rising demand for healthcare services and an increasingly strained Social Security program. Such nations as Japan experienced an economic downturn when faced with an aging population, and it’s feared that the US will experience similar effects.
Retirement Benefits and Savings
It’s estimated that only 44 percent of US workers have work-based retirement plans, leaving many low- and middle-class workers reliant on Social Security for their retirement incomes. According to the Social Security Administration, the average monthly social security benefits for a retired worker for 2015 is $1,328. That’s an average of $15,936 per year –hardly enough to cover the costs of even a minor medical emergency.
Seniors who own their own homes have a distinct advantage in the coming crisis, as they can use reverse mortgages to tap into their home equity. This offers hope to middle-class seniors should they start to feel financially strapped, but does little to help those in lower income brackets, who may not be able to purchase their own home. It’s been speculated–with reason–that the coming crisis will be particularly hard on seniors in low-income minority groups.
How America will handle a retirement crisis remains to be seen, but one thing’s clear. As a nation, we need to take retirement savings much more seriously, or a large percent of our aging population will be unable to have the retirement security they deserve.