The following chart was extracted from an article from ReLab’s Backgrounder, The New School’s Schwartz Center For Economic Policy Analysis.
As one can clearly see, no near-retirement income group is in great shape when it comes to funding a retirement account, but the bottom 50% of older income earners are in terrible shape.
The move from defined benefit plans to defined contribution plans has crippled the lower income cohort. Why should we have expected any other outcome? Many of these near-retirees in the lower income category don’t have access to a retirement plan at all. Furthermore, DC plans, as we and others have reported, are asking too much of untrained workers when it comes to funding, managing, and dispersing this retirement “benefit”.
REAL change is needed, and fast. Asking employees to work longer is not always in the cards, as employers frequently have a different objective. It is estimated by ReLab that 40% of the roughly 21.5 million older workers (ages 50-60) will be downwardly mobile upon retirement, with incomes <200% of the poverty level. This is both shocking and shameful.
It doesn’t take a rocket scientist to understand the impact that this downward mobility will have on our consumer-driven economy.