Many Americans Will Not Retire Until They Die

The retirement dilemma is particularly acute among older Americans. Laurie Nordquist, head of Wells Fargo Institutional Retirement and Trust remarked:

We do this survey every year and for the past three years, the struggle to pay bills is a growing concern and the prospect of saving for retirement looks dim, particularly for those in their prime saving years.

Aside from savings, many people say that the “loss or diminishment of Social Security” is their greatest financial fear. As the federal government struggles to manage huge deficits and keep down the national debt, there is reason to fear that benefits will not start until people are older, or that payments will be cut to reverse the upward march of the burden of entitlement programs.

It is often noted that as more and more people over 65 work well into another decade or longer, some people in the economy lose job prospects. Data from the Bureau of Labor Statistics tell the story. Unemployment for people aged 20 to 24 is 12.9%. For people over 25, the number is 6%, and for those over 55 the figure is 5.3%. Contrary to popular belief, the aged can get jobs and are not necessarily replaced by younger people who may have more stamina or a more recently minted higher education.

Since the start of the recession, the pattern of high unemployment among young people remains stubbornly unchanged. The idea that there will be a “lost generation” of American workers who do not find jobs until they are well into their 20s may be the single largest after-effect of the economic catastrophe. These same people are supposed to drive gross domestic product (GDP) at a growing rate of consumer spending as they age and their median incomes increase. As a matter of fact, GDP improvement a decade from now will count to some large extent on the earning power for these people as they enter their 30s and 40s. If this pattern is delayed, or its impact is retarded, GDP could stumble again toward the end of this decade.

Also, consumption among those older than 65 cannot replace that of people who should be in their prime earning years. Those elderly Americans will hang on to as much of their earnings as possible, in the hope that they can retire for just a few years. It is the only way for them to have a chance to stop working before they die.