Impacting US households in numerous Ways
Money problems are impacting US households in numerous ways. With workers coping with stagnant wages and the soaring cost of necessities, financial troubles are leading to higher divorce rates, adults moving back home with their parents and older Americans getting more economically insecure as they help their children with recurring expenses, which has been compromising their ability to save for their future. All of that is contributing to the ongoing retirement crisis. Experts say conditions are set to aggravate even further in 2024 when we reach what they call “peak 65,” when the number of 65-year-olds hits the highest level in history. However, most of them remain unprepared for retirement, and broken families play a major role in this worsening situation, new research shows. That’s why today, we decided to expose how the degradation of American families is making seniors in the United States more financially vulnerable than ever before.
America’s retirement system is broken, and has been failing to provide workers the independence they need to maintain their standard of living post-retirement.But the truth is that this crisis is much more complex than it seems, and new research shows that broken families are also having a significant impact on the finances of older Americans. Analysts at Barron’s point to family issues as one of the biggest threats to retirement. Over generations, parents have set up their kids to success, but today, that assistance is costing much more than it did in the past and also lasting far longer. For instance, the cost of a four-year private college averages $48,500 a year, double what it did in the late 1980s. However, many college students now graduate with a load of debt that makes it hard to survive on an entry-level salary without financial help from mom and dad. New data from Pew Research shows that more young adults are living with their parents than with romantic partners for the first time since the late 1800s.
Seeing their children experiencing financial hardship, almost three-quarters of respondents acknowledged putting their children’s interests ahead of their own retirement needs. On top of that, even though those children are adults and away from home, their parents are still spending money on them. Too much money. In 2022, nearly 80% of parents gave some financial support to their adult children — to the tune of $500 billion a year, according to estimates by consulting firm Age Wave. That’s twice what parents put into retirement accounts, according to a survey from Bank of America.
Moreover, financial troubles are one of the main reasons why American couples continue to divorce at increasingly higher rates with each passing year. And that can also wreak havoc on retirement savings and people’s overall financial way of life, the analysts highlight.
“Whatever assets that will be left over after the divorce will be cut in half,” explains Rachael Burns, CFP, certified divorce financial analyst. Couples typically split living expenses, which can help them boost their retirement savings. “But once you cut the marital cord, you’ll likely be on your own and see a spike in cost of living based on your new single status,” Burns outlines.
It seems that no matter how much they’ve tried to reach financial security, more and more risks continue to emerge. One unexpected financial setback can throw them off the edge and push them right back to square one. And considering just how big the population of seniors is getting, it is clear that this crisis isn’t just going to affect older Americans, but our society as a whole.
Credit to : Epic Economist
