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What’s your retirement risk?

By Jennie L. Phipps · Bankrate.com
Tuesday, November 6, 2012
Posted: 5 pm ET

I stood in line waiting to vote for about an hour Tuesday at the community center in my Detroit-area town, all the while listening to my neighbor complain that she didn't like either of the candidates. "It doesn't matter who wins. Neither of them are going to be able fix my problem," she grumbled. "Hitting the lottery is the only thing that's going to help."

Her sentiments were reflected in the latest retirement analysis released Tuesday by the Center for Retirement Research at Boston College. The center concluded that based on the National Retirement Risk Index, more than half of U.S. households "may be unable to maintain their standard of living in retirement."

The report pointed out that from 2007 to 2010, retirement risk jumped 9 percentage points for these four reasons.

  • The housing bubble burst, raising risk by 4.5 percentage points.
  • Interest rates fell, pushing risk up 2.2 percentage points.
  • The age at which people are able to collect full Social Security benefits is rising, increasing risk by 1.6 percentage points.
  • Investment returns continue to be rock bottom, raising risk 0.8 percentage points.

The hardest hit households, the center says, are those whose members plan to retire soon with no time to recover from the recession and households with high incomes that they can't sustain without well-paying jobs, the center says.

My neighbor is feeling the pinch from the decline in housing prices that hit Michigan and other Rust Belt states particularly hard. In this part of the country, housing values are still much lower than they were six years ago. This fall in home prices wiped out the equity that many people, including my neighbor, hoped to use to help fund their retirements. And like my neighbor, many face big mortgage payments caused by the decision to refinance when times were good.

The lesson in this for anyone far enough away from retirement to have breathing room is the importance of paying off the mortgage or otherwise freeing yourself from a big debt that, combined with taxes and insurance costs, can eat up your retirement income.

Here's a retirement planning truth: If you have a roof over your head that is all yours, you can muddle through, even if you don't have a fortune in pensions and savings.

Are you set for retirement? What financial obstacles do you see?

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35 Comments
mtc
November 07, 2012 at 7:06 pm

Obama had 4 years, he's tanked the country, allowed our citizens to be murdered, raped, and pillaged, lied, covered up, spent recklessly like the gorging pigs he and his wife is.

Work with Obama? What's his excuse going to be for the next 4 years when the only "work" he did the last 4 was on his golf swing.

Oh - Obamacare? My elderly mother cannot afford her medicines but she's white, owns a home, and has a pension, so HER fixed income doesn't matter.

Obamacare caters only to those who don't work.

Cnote
November 07, 2012 at 6:54 pm

The Retired...HaHa, you think Obama really cares about you?...not even close. He's way past you, and has put $217k of debt upon every child under the age of 18 because of his "programs" instated. The uneducated and individuals with their hand out for the gov't to keep them breathing our same air, just put us into another 4 more years of hell. That in turn will compound our fractured status even worse. Get ready people it's coming, inflation will skyrocket, fuel and food will skyrocket, and your taxes will skyrocket. We've lost the 18-25 year olds, as they have already begun to approve socialistic ways. We need to cultivate our youngsters in elementary school, and teach them the true history of America...not the changing of our Constitution before our very eyes.

Robert H. Tock
November 07, 2012 at 6:40 pm

Obami and the Democrat Socialists are NO friends of responsible, retired people. The Democrat Socialist agenda is to RE-DISTRIBUTE wealth, equity. The people with equity are responsible, retired people. If you saved all of your life you have equity. If you have equity, the Democrat Socialist deem tis (to quote Lenin): "..only fair to (re-distribute) the wealth."

the key word is: Responsible....

Oh.

Excited & Grateful
November 07, 2012 at 6:34 pm

Thankfully Obama was reelected by the majority...time now to continue righting that ship we were left with....the economy is recovering...albeit slowly ...but on an upswing...housing in my area is getting hot with multiple offers on some and reduced low priced homes...still foreclosures ...the percentage is finally falling...roads are being repaved, fixed..major highways for miles and miles...so I hope you all have the same in your area...if not yet..hang on...it's coming...stay positive...negativity that has been rampant up to the election is all manufactured to get you to vote one way or the other...

Loretta Phy
November 07, 2012 at 6:29 pm

Personally I don't understand what the big deal is. If you haven't put forth enough towards your very own retirement, then it is your fault. If you live a certain way & after you retire can't maintain that lifestyle, learn to adapt. Obama has done so much for this country in the 4 years he has had & will continue to do great things. Stop thinking that the world revolves around only the rich because the truth is, if it wasn't for the middle class the rich wouldn't be rich.

On another note, go refresh your knowledge & take an economics class & figure out what supply & demand is all about, then come back & blame the President for the lack of jobs in our country. It is not that way. The truth is, people like Romney made it so companies could safe money by exporting jobs across the world to places like China. That does not bring jobs here in our backyard now does it? Knowledge beats ignorance every time.

Regina Barfield
November 07, 2012 at 6:21 pm

A rough ride after the re-election of Obama is putting it mildly. If you are 62 or older, he believes we should be stood against a wall and shot as we are no longer worthy of breathing air. I truly believe the day will come when Americans will be more than sorry for following an egomaniacs agenda....a truly sad and heartbreaking day for America as we have known it. Maybe Obama will make it to age 62!

Bob Haugen
November 07, 2012 at 6:14 pm

H.L. Mencken once said, "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

Dave Jones
November 07, 2012 at 6:10 pm

It seems to me that you are a Romney supporter. The Affordable Health Care Act - or as those who try to demonize call it Obamacare - is just that; it is an attempt to make sure that everyone is covered. If you didn't know health care cost is outrageous; a lot of people are without coverage; this includes children; of course if you are wealthy you don't need it. However, most of us need it. I don't see anything wrong with this humane argument. Do you?
Don't try to kid us. My wife's cousin is an orthopedic surgeon in Germany and he says the health system is great; and yes, it is socialized. Of course some people want to leave a person to die if he doesn't have health care; the "let them die" attitude.

Lady Luck
November 07, 2012 at 5:59 pm

We were in a recession several years ago. No president can right what went wrong years ago. Instead of pointing fingers, we need to work together as a country to make it better for
all of us. It is what it is.
My blessings are with you Obama. You have your hand full.

George Durdin
November 07, 2012 at 5:49 pm

Hold on ...the next four years are going to be a rough ride after the re-election of President Obama....the worst possible out come for seniors. The 716 billion taken out of Medicare to fund the ACA (Obamacare)will be felt in the very near future. It will start with doctors refusing to take Medicare patients, a slow down or loss of some services and of the course the ACA's 15 member board that will determine what Medicare and the ACA will pay.It is also projected the Obamacare will be responsible for the closing of about 10% of the hospitals over the next ten years. Welcome to socialized medicine.....the day will come when the American people will be sorry for following an egomaniacs agenda.