Nov. 10, 2022- A disturbing statistic emerged in 2021. In that year 10.7% of America’s over 65 population lived in poverty, up from 9.5% in 2020. While that is a lot better than the third of elderly Americans who were in poverty before Medicare came along, it is an alarming trend. Although poverty among the elderly in the U.S. is low by historical standards, we have one of the highest rates in the developed world, per the Organization for Economic Cooperation and Development. Unfortunately, there is a long list of reasons why so many older people face economic hardships.
The pandemic was a big reason for the poverty rate uptick in 2021. People lost their jobs and businesses. One person in the marriage might have died from Covid, or they faced big and unexpected medical expenses. But there are many other reasons beyond the pandemic too. People retiring today are much less likely to have a pension than in the past. Some might not even had had a chance to participate in an IRA or 404(k), or make enough to amass significant savings. Think of someone who made the minimum wage or just above it, how were they going to even get by, much less save for retirement? Many other workers were doing OK, only to find their jobs ending well before they wanted to retire. Debt, medical problems, having to take care of elderly parents or adult children, etc. can mean a retirement in poverty for others.
There are ideas for how to solve this crisis, but none of them are a cure all. Requiring companies to offer 401(k) plans with mandatory participation is one thought. Helping older workers stay at jobs longer, or retraining them, is another. Although some government programs are meant to help people in poverty, more realistic guidelines for who qualifies is an idea that many experts are pushing.
If you are worried about money in your retirement
The time to act is before you end up retired. Try to work longer before you pull the trigger, and save as much as you can. Many people assume they will work until they don’t want to. Unfortunately, health problems and business conditions mean your retirement might start before you want to. If that happens, look for a part-time job you enjoy. Some programs might be able to help too, like a food pantry.
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