A quarter of middle-class Americans are now so pessimistic about their savings that they are planning to delay retirement until they are at least 80 years oldtwo years longer than the average person is even expected to live.
It sounds depressing, but for many it’s a necessity. On average, Americans have only saved a mere 7 percent of the retirement nest egg they were hoping to build, according to Wells Fargo’s latest retirement survey that polled 1,500 middle-class Americans.
According to an article on //money.usnews.com, here are some common ways to pay for retirement:
1. Social Security
The proportion of workers expecting to rely on Social Security as a major source of retirement income has grown from 27 percent in 2007 to 33 percent in 2012, according to a recent Gallup poll of 1,016 adults.
2. Delay filing for Social Security
Consider a retiree who could claim $12,000 a year at age 65 and $12,860 at age 66–$860 more. If he delays claiming for a year and uses $12,860 from savings or continuing to work to pay the bills that year, $12,860 is the price of the extra $860 income. Plus, Social Security benefits are indexed for inflation, which means by delaying his claim for Social Security for one year he increases his total retirement income from Social Security over his life expectancy.
3. Retirement accounts
While more than half (52 percent) of workers said their retirement account would be a major source of retirement income before the recession in 2007, just 46 percent of employees feel that way now. And only about a quarter (24 percent) of retirees count their 401(k) or IRA withdrawals as one of their major income sources.
“There’s a generational change in that older people who are already retired tend to be more likely to have pensions,” says Dennis Jacobe, Gallup’s chief economist. “Younger people aren’t as likely to have pensions. They tend to expect to depend more on things like their 401(k)s and personal accounts.”