One of the greatest services that retirement planners can do for their clients is to advise them to delay receiving Social Security benefits until beyond age 62, according to recent testimony before the Congressional Special Committee on Aging.
Addressing what it calls a “retirement crisis,” the Special Committee on Aging met recently to hear testimony on the “State of the American Senior: The Changing Landscape for Baby Boomers.” The meeting was led by Chairman Bill Nelson (D-FL) and Ranking Member Susan Collins (R-ME).
The special hearing was called to discuss the current plight of the Baby Boomer generation as it reaches retirement age. For the first time since the Great Depression, a majority of Americans are said to be approaching retirement less financially secure than their parents.
Making matters worse, the average retiree today carries more debt heading into retirement than a generation ago. And they lack pension benefits or retirement savings to afford a comfortable living in retirement.
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“Far too many American seniors struggle to get by and have real reason to fear they will outlive their savings,” Senator Collins said. “Nationally, one in four retired Americans have no source of income beyond Social Security—in Maine, that number is one in three—and four in 10 rely on that vital program for 90 percent of their retirement income. Bear in mind that Social Security provides an average benefit of just $1,230 per month. It is hard to imagine stretching those dollars far enough to pay the bills,” she said.
That message was reinforced by testimony by one of the speakers at the hearing. Sixty-three year-old Venice, FL resident Joanne Jacobsen said she had always assumed her promised pension and health benefits would be sufficient for her in retirement. But then her benefits were all but eliminated by her long-term employer.
Jacobsen told the hearing that faced with little money and no health insurance; she was forced to go back to work to make ends meet.
Her story is far too common, Collins said, as a majority of Baby Boomers are ill-prepared to financially survive in retirement. There are several factors at work, from changes in pension plans, to changes in healthcare reimbursements, to impacts on personal savings and home values from the recent Great Recession, as it is being known.
Gone are the days when greying Americans could cling to the belief that they would be well-cared for in retirement.