Will you Retire in Comfort or End Up Working at Wal-Mart in your Golden Years?

This article originally published in West Orlando News Online.

In 2011, how is it even possible to save enough for retirement, when millions of middle class Americans have a full-time job and still make barely enough to get by each month?  Then factor in the current loss of hours or cut in salaries; high rate of unemployment and foreclosures;  stress related illnesses causing additional medical bills;

the increasing cost of groceries and utility bills; gasoline price changes daily at the pump.

  Let’s take a look back at how the average person in the 1980’s and 1990’s facing retirement would have planned their golden years.

The majority of people ready to retire would have paid off their 30 year mortgage (probably never refinanced).

Selling the primary home and then paying cash for a smaller house or condo.

Empty Nesters: The children were grown, college educated and doing pretty good on their own.

Saving for retirement/investing were high on the priority list throughout the (30-40) years of work.

Looking forward to retire with money from multiple resources such as Social Security Retirement, in addition to their pensions, personal 401k, investments and or savings.

Now fast forward to 2011 and take a look at some of the key factors keeping most people from saving for retirement.

Refinanced during the real estate boom.  (This probably extended the length of the loan another 30 years, raised the interest rate and monthly payments.)

Can’t sell primary residence because they now owe more than home is worth.

Grown children laid off from jobs have returned home with their families for financial support.

Had to borrow from 401k and savings before retirement to save home from foreclosure, pay high medical bills or bail grown children or themselves out of a financial crisis.

Job no longer offers pension and any other resources wiped out.

Delaying retirement another 5-10 years, because there will only be one resource, such as Social Security Retirement for the golden years.

“In the 2011 Retirement Confidence Survey, more than half of workers say they expect to retire at age 65 or later (62%, compared with 45% in 1991). Moreover, workers are now more than twice as likely to indicate they will retire at age 70 or later (25%, up from 9% in 1991)”

So where does this leave the African-American community where many families counted on the equity in their home an asset, life insurance with cash value and their 401k the safest investments for their future? According to the retirement Confidence Survey “The total number of African-Americans (24.7%) currently living below the poverty line (family of four with household income below $21,203) more than doubled from 2008 to 2010.”  All the evidence points to more and more African-Americans relying on Social Security as their only source of income in retirement unless they get a part-time job to supplement their income.   For example:

Approximately 50% of retired African-Americans  rely on Social Security for 90% or more of their income.

Almost 75% of retired African-Americans rely on Social Security for at least 50% of their income

About 40% of retired African-Americans rely on Social Security for ALL OF THEIR INCOME!

The Social Security Website says that the retirement benefits they pay out are only to supplement an income.  “But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably. To have a comfortable retirement, Americans need much more than just Social Security. They also need private pensions, savings and investments.”

Listed below are the average 2011 monthly benefits for Social Security by category.  Maybe this is one of the reasons that so many people end up working at Wal-Mart to supplement their income after they have retired from their jobs. Also African-Americans account for only 9% of the elderly population but make up 21% of older people living well below the poverty line.

Average 2011 monthly Social Security benefits

Retired worker: $1,174

Retired couple: $1,907

Disabled worker: $1,067

Disabled worker with a spouse and child: $1,813

Widow or widower: $1,133

Young widow or widower with two children: $2,409

Beginning in January 2011, over 10,000 people will turn age 65 every single day for the next 19-20 years. It looks like the baby-boomer generation, including African-Americans are in for a huge reality check of how well they planned for retirement.

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