While Palome had a successful career, paid off his mortgage and put his kids through college, like most Americans he didn’t save enough for retirement. Even many affluent baby boomers approaching the end of their careers haven’t come close to saving the 10 to 20 times their annual working income that investment experts say they’ll need to maintain their standard of living.
For middle-class households, with incomes ranging from the middle five to low six figures, it’s especially grim. When the 2008 financial crisis hit, what little Palome had saved — $90,000 — took a beating and he suddenly found himself in need of cash. With years, if not decades, of life ahead of him, Palome took the jobs he could find.
The youthful and perennially optimistic grandfather considers himself lucky. He’s blessed with good health, he said. He’s able to work, live independently and maintain his dignity, even if he has to mop the floors at the club before going home at 8 p.m. and getting off his feet.
“That’s part of the job,” he said. “You have to respect the job you’re doing and not be negative — or don’t do it.”
Low-income Americans have long had to scrape by in old age, relying primarily on Social Security. The middle class, with its more educated and resourceful retirees, is supposed to be better prepared, with some even having the luxury to forge fulfilling second acts as they redefine retirement on their own terms.
The reality is often quite another story. More seniors who spent careers as corporate managers and professionals are competing for low-wage jobs. For these growing ranks of seniors with scant savings, it’s the end of retirement.
About 7.2 million Americans who were 65 or older were employed last year, a 67 percent increase from a decade ago, according to government data. Yet 59 percent of households headed by people 65 or older have no retirement account assets, according to Federal Reserve data.
“People who built successful careers, put their kids through college and saved what they could are still facing downward mobility,” said Teresa Ghilarducci, an economist at the New York university the New School who has studied the finances of seniors.
It’s about to get worse for those in the baby-boomer generation, who began turning 65 in 2011 and are reaching that age at a rate of about 8,000 a day. They’re the first generation expected to fund their own retirements, even as they live longer.
They’re coming up short. Company-paid pensions have mostly been replaced by 401(k) accounts primarily funded and managed by employees. The median 401(k) balance for households of people ages 55 to 64 was $120,000 in 2011, according to the Center for Retirement Research at Boston College.