The dream of a comfortable retirement isn’t guaranteed to come true – and that has plenty of middle-aged and older people in Erie County nervous.
A new survey of Erie County residents between the ages of 35 and 69 found that more than half say they are anxious that they’ll have a comfortable retirement.
More than three of every five worry that they’re not saving enough.
And more than one of every five say they’re not confident that they’ll ever be able to retire.
The results from a survey of 700 Erie County residents conducted by AARP didn’t surprise Stanley Lichwala, a certified financial planner at Wells Fargo Advisors in Amherst. The silver-haired financial consultant said he sees proof of the challenges older Americans face in retirement every time he goes shopping.
“Just go into Walmart or Lowe’s and look at the people working there. Then notice how many of them have the same hair color I do,” Lichwala said.
AARP officials said the survey shows the precarious financial position many people in the Buffalo Niagara region – and across New York – face as they approach retirement.
They haven’t saved enough.
They are increasingly burdened by student loan debt – first their own and now borrowings to help pay for their children’s college educations.
And roughly one of every five Erie County workers don’t have access to a retirement savings plan at their jobs.
“Some are afraid they’ll never be able to retire,” said Beth Finkel, AARP’s New York state director. “Is that our plan for retirement? To work until you drop?”
The level of pessimism surprised Dot Swift, the administrator of the Council for Older Adults in Niagara County. “I’m shocked at the number of people who don’t think they’ll ever be able to stop working,” she said.
With Social Security providing only a portion of the income most retirees need to live a middle-class lifestyle and most employers eliminating the traditional pension plans that were a staple for a previous generation of retirees, workers in their mid-30s and above increasingly must rely on their own savings to fund their retirement.
And most Baby Boomers and Generation X workers are worried that they haven’t been saving enough. A 2015 study by the National Institute for Retirement Security, using data from the Federal Reserve’s 2013 Survey of Consumer Finances, found that American households nearing retirement had a median balance of $14,500 in their retirement accounts.
“People do not have a cushion to absorb financial shocks as they happen,” said Angela Houghton, AARP’s senior research adviser.
At the same time, those workers still are dreaming about being able to retire relatively young. The Erie County workers surveyed by AARP said they were somewhat confident that they’d be able to retire at age 64.
“People are not saving, but they still expect to retire at a certain age,” said Bill Armbruster, AARP’s associate state director.
The trouble for retirees is that they need to save a lot, and they have to make it last a long time, since a 65-year-old man has a 50 percent chance of living until the age of 88, said Lichwala.
To get there means a 65-year-old with a $1 million nest egg who withdraws 4 percent a year ($40,000 in the first year) from their retirement savings has a 90 percent chance that their money will last for 30 years, assuming average returns on the financial markets.
“Generation X is facing a huge crisis and they are unaware of the crisis,” Lichwala said.
AARP officials in New York are pushing for the creation of a statewide mandate that would give workers access to retirement savings plans through their workplace that would operate much like the New York State College Savings Program. The state would facilitate the creation of the retirement savings program, but would not contribute to it.
While participation in the program would be voluntary, all workers at eligible companies would be automatically enrolled – a feature that would increase enrollment because workers who don’t want to contribute would have to take steps to opt out of the plan, said William Ferris, an AARP lobbyist in Albany.
While all workers currently have access to individual retirement accounts that serve the same purpose, Ferris said many workers don’t use them to build a retirement nest egg. An employer-based plan with automatic enrollment and the option of making contributions through payroll deduction would be a simpler way for employees to start building their savings.
“Doing nothing is not an option,” he said.