Middle Class Struggles to Save for Retirement

Searching for retirement savings rainbow

AARP has released an important study that looks at the challenges the middle class is facing on the road to a secure retirement. Authored by Barbara A. Butrica of the Urban Institute and Mikki D. Waid of the AARP Public Policy Institute, the conclusions are many; here are some of the key ones:

• Future retirees are expected to have slightly more retirement income than today's retirees, but these gains will be wiped out by higher out-of-pocket medical expenses.
• Social Security will be the main source of retirement income at all income levels, including 51% of per capita household income for future middle-income retirees, rising to over 80%for downwardly mobile middle-income retirees who will move into the lower-income group.
• Middle-income workers who move into the higher-income group in retirement will achieve this primarily by working longer (e.g., age 70)
• The retirement income gap among racial and ethnic groups is expected to narrow as the youngest groups move closer to retirement.
• The recent recession is expected to adversely affect the age 45-54 group as they have less time to regain losses as compared to current retirees.
• Rising out-of-pocket medical expenses will neutralize any improvements in retirement income and declining poverty rates.
• It will be difficult for future retirees to keep pace with the middle-calss standard of living.

The full report, What Are the Retirement Prospects of Middle-Class Americans?, is available on the AARP website.

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