Most seniors say the US is suffering a retirement crisis and many are struggling to save: Survey
Rising costs and inflation are making it hard for many seniors to make ends meet and to put funds aside for retirement, according to a recent AAG survey. (iStock)
Most seniors (89%) are worried that the U.S. is in the grip of a retirement crisis and nearly half said they are struggling to build their savings, according to a recent survey from the American Advisors Group's (AAG).
Nearly half (47%) of the seniors surveyed rated the conditions of their retirement savings as poor and 44% said they had not saved enough to retire comfortably. Additionally, 57% said they were somewhat or not optimistic that the savings would last through retirement.
Rising costs and inflation has made it hard for 40% of the respondents to make ends meet, and 47% said it was challenging to put funds aside for retirement.
Inflation hit 9.1% last June, a 40-year high and has since leveled off. However, Americans are still dealing with high prices on essentials like food, gas and shelter.
"The retirement savings crisis is a real thing," AAG Chief Marketing Officer Chris Moschner said in a statement. "Our data highlights the severity of the crisis and the actions seniors are taking to make ends meet."
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Reverse mortgage is one way to build wealth for seniors
To make ends meet, 60% of seniors said they cut back on discretionary expenses, with many scaling back on dining out, traveling and entertainment, according to the survey.
One way seniors can increase their cash flow is by tapping into their housing wealth through a reverse mortgage, AAG said.
Senior home equity increased by $226 billion in the third quarter of 2022 to record $11.81 trillion from the second quarter of 2022, according to the latest quarterly release of the National Reverse Mortgage Lenders Association.
A separate AAG survey said that 62% of adult children are worried that inflation is impacting their parent's retirement savings, with many (35%) worried they'll have to help their senior parents financially.
Amid this apprehension over whether their parents will have enough retirement savings, a growing number of adults have embraced the idea of using their parents' home equity as a financial solution, the survey said.
"In inflationary times like these, a reverse mortgage is one option seniors can utilize to generate increased cash flow by unlocking their home equity and easing the pressures on everyday expenses," Moschner said.
Another option for pulling equity from your home is with a cash-out refinance. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
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A third (32%) of Americans over traditional retirement age, between 65 and 74, are expected to be still working in 2030, a recent Voya Financial survey said. In 2000, only 19% of those between 65 and 74 were working.
These so-called 'employment extenders' said they are working longer by choice, yet most (92%) said they had not saved enough for retirement, with 60% having less than $500,000 in savings.
"What is particularly alarming is that most are not planning for the possibility that they may be physically unable to work or have a loved one who needs ongoing medical care, even though both these circumstances have high probabilities," the survey said. "Despite the fact that 40% of adults aged 65 years and older are living with a disability today, just a third (36%) are planning that they might not be physically able to work as long as they want, and only 13% are thinking about not being mentally able to work as long as they want."
If high-interest debt is preventing you from saving more for retirement, consider paying it off with a personal loan at a lower interest rate. Visit Credible to get your personalized rate in minutes without affecting your credit score.
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