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“Americans deserve to retire with dignity,” but the current system doesn’t allow that

During the golden years, when rest and leisure should be the reward for decades of dedication, the American dream of retirement quietly turns into an elusive fantasy for many.

As financial insecurity increases with age, retirement becomes a luxury that few can afford. This stark reality is highlighted by Senator Bernie Sanders (I-Vermont) in a new report that sheds light on the challenges facing people approaching or considering retirement.

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The National Retirement Risk Index, referenced in Sanders’ report, makes a troubling finding: About half of all U.S. households are poised to see a decline in their living standards in retirement. The situation is even worse for 56% of low-income families and 45% of middle-income families, all of whom are at risk of not being able to maintain their pre-retirement lifestyle once they reach 65. The gap widens when we look at the distribution of wealth, with 73% of the least affluent at risk, compared to just 28% of the most affluent.

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Sanders’ report states a simple truth: “After a lifetime of hard work, Americans deserve to retire with dignity.”

Yet the current pension system, which benefits Wall Street, leaves many workers faced with the prospect of a financially uncertain retirement. The urgent need for reform is clear as more and more older Americans live near the poverty line. According to the Census Bureau’s Current Population Survey, more than half of Americans over age 65 live on an income of $30,000 or less per year, while nearly a quarter live on between $10,000 and $19,999.

The Federal Reserve’s Survey of Consumer Finances reveals another area of ​​concern: the lack of retirement savings. Only 42% of Americans age 75 and older, and 51% of Americans ages 65 to 74, have a retirement account. This lack of a financial safety net is alarming, especially since about 10% of older Americans live in poverty, a figure that would rise to 38% without Social Security income. Yet U.S. Social Security benefits are lower than those of many other wealthy countries, accounting for less than 40% of a worker’s income, compared to the Organization for Economic Co-operation and Development (OECD) average of 51.8%.

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Trending: Can I get spousal Social Security and switch to my benefits at age 67? Find out how you can receive up to 50% of your spouse’s primary insurance amount.

In response to this crisis, Sanders and other lawmakers are proposing several legislative solutions aimed at increasing Social Security benefits, setting up automatic savings accounts for children, and creating retirement accounts for those without employer options. These efforts come at a crucial time, as many older Americans face not only financial challenges but also the need to support their adult children, while younger generations face economic challenges. The conversation about retirement and financial security is more urgent than ever and highlights the critical need for systemic change to ensure that retirement with dignity becomes a reality for all Americans.

For people concerned about their financial preparation for retirement, consulting with a financial advisor can be a crucial step toward gaining clarity and confidence in their future plans. A financial advisor brings a wealth of knowledge and expertise in retirement planning, offering personalized strategies that fit an individual’s unique financial situation, goals and risk tolerance.

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This article shows that more than half of older adults survive on less than $30,000 a year: “Americans deserve to retire with dignity,” but the current system does not allow this. Originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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