Middle-income retirees (those with incomes from $30,000 to $100,000), will retire, on average, with less than $100,000 in their retirement accounts (and some with no retirement account at all). The low account balance will not allow a 4% withdrawal to be sufficient (a mere average of $4,000 a year) and will require middle-income retirees to be more dependent on Social Security, equity in their homes, and working later into retirement. Choices may not be between lifestyle goals, but survival. Added to this is the beginning of the baby boom generation reaching retirement. These consequences have ramifications for the economy as whole, straining a fragile Social Security system, experiencing equity lost in homes in the recent recession, and creating detrimental effects on employment for younger workers. But does this constitute a crisis and what solutions can be offered to counteract the grim statistics?
Cindy Shnaider, MSF, is Co-Chair of the Graduate Studies Program at the College for Financial Planning, as well as teaching courses in the financial major and the introductory communications course. She also teaches at Columbia College.