Rising Risk Coupled with Escalating Housing, Healthcare and Long-Term Care Costs Increasingly Threaten  Americans’ Financial Security in Retirement

New Report from the National Institute on Retirement Security Offers Four Policy Solutions to Strengthen Retirement Outcomes

Webinar on September 16th to Review Findings

WASHINGTON, D.C., September 9, 2020 – The burden of preparing for retirement is increasing as workers face more risk and rising costs. Escalating housing, healthcare, and long-term care costs in retirement are creating retirement obstacles for Americans. Also, the shift from pensions to 401(k) plans has pushed more retirement risk onto workers.

These findings are detailed in a new study from the National Institute on Retirement Security (NIRS), The Growing Burden of Retirement: Rising Costs and More Risk Increase Uncertainty, available here. Authored by Tyler Bond, NIRS research manager, and Dan Doonan, NIRS executive director, this report provides a roadmap to the many hurdles that are making it increasingly difficult to achieve a financially secure retirement.

Register here for a webinar on Wednesday, September 16, 2020, at 2:00 PM ET to review the findings and respond to questions.

“Taken together, rising costs and the challenge of accumulating and investing savings are making retirement an unsolvable puzzle for most Americans,” said report co-author Tyler Bond. “We’re on a path to a predictable and unfortunate outcome – millions of working Americans unable to meet their basic needs in retirement. This report details the complex burdens and pitfalls facing workers who often are trying their best to prepare for retirement. We find that four public policies would substantially improve Americans’ retirement outcomes: addressing long-term care costs, creating stronger tax provisions, improving lifetime benefit options, and expanding Social Security,” Bond explained.

“Absent a serious rebuilding of America’s retirement infrastructure, these systemic problems will be unsurmountable for too many families,” said report co-author Dan Doonan. “Instead, policymakers can take steps now to build forward-looking solutions that enable Americans to be self-sufficient as they age. Otherwise, older Americans will be forced to turn to their families or government programs to meet their most basic needs. That is a burdensome, costly and unsustainable approach,” Doonan said.

The report finds that:

  • Saving early and continuously during working years is difficult for many workers. While organizations offer suggested retirement savings targets for each age, many workers may struggle to meet them, even if they have a desire to save.
  • Workers face market timing, interest rate, and longevity risks when they approach retirement age. Any of these risks can derail carefully laid retirement plans and together they can make the prospect of retirement daunting.
  • While older Americans are the most likely to own a home, the number of Americans age 65 and older who are cost-burdened by housing costs has increased as more seniors are carrying mortgage debt into retirement.
  • Healthcare costs continue to rise for all Americans, but these costs are higher for older Americans, who are more likely to have multiple chronic health conditions. Furthermore, lower-income seniors spend a greater proportion of their income on healthcare costs than their more affluent peers.
  • Long-term care costs represent an increasing challenge for many older Americans as more senior citizens need long-term care every year. While it can be prohibitively expensive for those who require nursing home care for multiple years, the majority of seniors receiving long-term care will receive it at home or in a non-nursing facility. This need is projected to increase even more as the Baby Boomers continue retiring.
  • Creative solutions exist to address these challenges. Washington State is pioneering a program to cover long-term care costs using a social insurance model. The private sector is working to create lifetime income options for retirees and expand access to workplace plans. Meanwhile, experts have proposed allowing retirees to purchase annuities through Social Security. And, expanding Social Security would have a broad impact as most seniors receive the majority of their income through the program.

The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers and the economy as a whole. Located in Washington, D.C., NIRS’ diverse membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at www.nirsonline.org. Follow NIRS on Twitter @NIRSonline.