Do you worry about outliving your retirement savings? If so, you're in good company. Just more than half of Americans (56 percent) say they're financially prepared to live to age 75, and only 46 percent think they can make it to 85 on their savings, according to a new study from Northwestern Mutual. Fewer people (36 percent) say they have enough to get them to age 95.
It's hard to be optimistic about having enough money to last 30 years or longer. What a retirement planning feat that would be. That's about the same amount of time we spend toiling in the workforce.
But the prospect of facing poverty in the so-called golden years was made all too real this week with the release of a paper from the Employee Benefit Research Institute, a nonpartisan research organization. It found that poverty rates for older Americans rose between 2005 and 2009 -- and those over age 85 were most affected. In 2009, nearly 15 percent in that age group lived in poverty, and 6 percent were new entrants to this unfortunate predicament.
Individuals age 65 and older live in poverty if their annual income is lower than $10,458, according to 2010 statistics by the U.S. Census Bureau. Couples age 65 and older making less than $13,194 also qualify as poverty stricken.
The most susceptible
Single women, Hispanics and blacks are most vulnerable to becoming poor, according to the report; whites and married couples are generally better off.
The growing rate of poverty among older people can be attributed to a few things, according to Sudipto Banerjee of EBRI who authored the report. "As people age, personal savings and pension account balances are depleted, and as people age, their medical expenditures tend to increase," he notes in a press release.
The most disturbing fact, at least from my point of view: Poverty rates for women are about twice that of men in all the years surveyed. For instance, in 2005, 5.1 percent of men age 65 or above were in poverty versus 11 percent of women. And in 2009, the last year studied, 7 percent of men compared to 13 percent of women were indigent.
About 30 years ago, I attended a meeting at which two female financial advisers made a presentation about older women in poverty. Their central message: This will be you if you don't start saving for retirement right now. It really hit home.
And though I saved over the years, I don't feel confident I'll have enough to last 30 or more years. That's a long time. The insurance industry has a bevy of guaranteed retirement income products to sell worried Americans, including longevity insurance, which can be purchased for a lump sum at around 65 and then typically gives you an annual income beginning at age 85. It's a bit of a crap shoot. You're betting you'll live to a ripe old age to collect the benefit. If you don't live that long, well, the shareholders of the insurance company will benefit from higher profits.
At one time, I would have handily rejected getting it, but as I get older, I think it's something to consider. What do you think?
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