Retirement Crisis Looms As Average U.S. Household Has Saved $2,500 For Retirement

Tyler Durden's picture

The global demographic crisis expected to play out over the coming years has been a frequent topic of ours (you can read our most recent post on the topic here:  "DB Warns 35-Year Economic Super Cycle Is Officially Ending").  The problem, of course, is that baby boomers all over the globe are on the verge of transitioning out of their highest wage earning years and into retirement.  That transition brings with it all sort of negative consequences ranging from the detrimental impact on average incomes and GDP to exposing the epic ponzi schemes that workers have heretofore referred to by their more common names of pension plans, social security, medicare and medicaid. 

A report from the National Institute on Retirement Security (NIRS) recently pointed out just how ill prepared American's are for retirement.  The study by the NIRS found that the average American household has $2,500 saved for their retirement.  Even worse, the study found that even people near retirement (aged 55-64) have only set aside $14,500 which should allow them to live very comfortably for about 2-3 months. 



Among working households in the U.S., 40% were found to have no savings set aside for retirement at all and nearly 80% had less than enough to cover 1 year of expenses. 



Russ Kamp, a pension consultant, recently summarized the issue to the Financial Times saying, “We have a crisis unfolding here... for millions and millions of Americans, the only thing they’ll have is Social Security.”  But, Social Security only provides about 35% of a typical household’s pre-retirement income which, given the statistics above, isn't going to be nearly enough to fill the earnings gap that most retirees will face.

That said, even the 35% is generous when taking into account the fact that Social Security is insolvent and will run out of money by 2034 according to their own reports.  In fact, the Social Security Board's 2016 annual report points out that the Disability Insurance Trust Fund actually ran out of money in 2016 and has only been able to continue making payments to beneficiaries by borrowing from the "Old Age and Survivors Insurance Trust Fund." 

The Bipartisan Budget Act of 2015 was projected to postpone the depletion of Social Security Disability Insurance (DI) Trust Fund by six years, to 2022 from 2016, largely by temporarily reallocating a portion of the payroll tax rate from the Old Age and Survivors Insurance (OASI) Trust Fund to the DI Trust Fund. The effect of updated programmatic, demographic and economic data extends the DI Trust Fund reserve depletion date by an additional year, to the third quarter of 2023, in this year's report. While legislation is needed to address all of Social Security's financial imbalances, the need remains most pressing with respect to the program's disability insurance component.


The OASI and DI trust funds are by law separate entities. However, to summarize overall Social Security finances, the Trustees have traditionally emphasized the financial status of the hypothetical combined trust funds for OASI and DI. The combined funds satisfy the Trustees' test of short-range (ten-year) close actuarial balance. The Trustees project that the combined fund asset reserves at the beginning of each year will exceed that year's projected cost through 2028. However, the funds fail the test of long-range close actuarial balance.

Alas, the report also admits that the games can only go on so long, as all of the Social Security Trust Funds are expected to run out of cash by 2034.

The Trustees project that the combined trust funds will be depleted in 2034, the same year projected in last year's report. The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.66 percent of taxable payroll, down from 2.68 percent projected in last year's report. This deficit amounts to 1.0 percent of GDP.

But we're sure these problems will just sort themselves out.  What we really need to focus on is an all new set of entitlements to payoff outstanding student debt and send kids to college "free of charge."

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CPL's picture

That's like 5000 cans of cat food.

Delving Eye's picture

That's like rich in Nowheresville, India.

hedgeless_horseman's picture


Pay yourself first every month...



Why?  It isn't hard.  Each month, the day before op-ex, buy the same dollar amount of gold, say $1,000.  When it is cheap you end up buying more ounces, when it is expensive you buy less for the same $1,000.  On average, your price per ounce is less, so your return is greater...much greater.

Everytime the paper-gold folks hammer the gold price before opex you can be thankful.


Expenses are low, as you don't need a Bloomberg terminal, phone, or even a desk. 


You don't need to waste your life sitting in compliance meetings, and you can sleep at night because gold has never gone to zero.

JRobby's picture

Mass die off (involuntary) 

mtl4's picture

There's no such thing as retirement, that was a 1940's, today you get to joing the work 'til you die plan while the elite continue to leverage your future earnings with the help of a bunch of ivory tower idiots playing bobble-head to their every move.

Stroke's picture

Another "Oh My God!" story


When the crash comes we'll see who survives & who doesn't


In the meantime just do the best you can

Automatic Choke's picture



how do you go long on trailer parks?


hedgeless_horseman's picture


Trailer parks are actually a very good investment.

VarenneRiver's picture

As a millenial, I stopped reading at retirement. 

hedgeless_horseman's picture


That is ok, the boomers stopped reading at "consequences".

Midas's picture

What say we beat Uncle Warren to the punch and get some Trailer Backed Securities (TBS) going?

Never One Roach's picture

Wait until the old folks try to sign up for a Medicare supplement or "Medicare Advantage." I helped a relative walk thru that minefield and learned medicare only covers 80% of many of the costs so the old person is stuck with 20% for things like doctor's visit, etc. The gubmint made it as difficult as possible for anyone to understand the ins and outs. That can run alot of money so you almoest need a supplement of some sort given the costs of things like ICU or cancer treatment these days. On top of that, many doctors don't even accept Medicare anymore since the Gubmint pays them pennies on the dollar.

I finally got him on a decent one but told him he better stay healthy, eat lots of veggies and grains, etc cause it will be painful for your body as well as your wallet if you get sick. It can easily bankrupt a person.



And the way United States is run these days it looks bleak for all age groups, at least for citizens, that is.

Son of Loki's picture

Hillbama and Congress threw American citizens under the bus. One more reason to vote anti-establishment, namely, vote for Trump.

Déjà view's picture

A Chicken In Every Pot...

Many do not have a pot to piss out to much.

FredFlintstone's picture

Going to the doctor is over rated. If your body aches it might be because you are older than Moses.

Chuck Walla's picture

E-mail Sam Zell, that's how he started. It's a simple deal. Flatten a lot, run some wires and water. Collect rent.


Yukon Cornholius's picture

I notice more and more people with wheelchairs/motorized scooters and I wonder how prepared they and their families are for hard times. The same goes for the women wearing pre-ripped jeans and carrying expensive-ish handbags. I can only assume families with autistic children will be pretty fucked too.

I assume the whole lot has less than one day's food and water on hand.

pods's picture

Think about all the ills you see around you, and realize we are at the top of the world's food chain as a country.

Imagine when the dollar stops being accepted for world trade.


Yukon Cornholius's picture

The sooner that moment comes, the better it will be for all.

mkkby's picture

Bullshit article. 

No need for obama's sons and daughters to have jobs or savings.  How do you retire from welfare?  Head to the nearest jail or fema camp.  The guards already know them on a first name basis.

Once the socialist systems crash, the last free meal is served with koolaide. 

City_Of_Champyinz's picture

The retirement 'age' was set at 65 for a very good reason.  The average age of death back then was 66.  This program was never meant to pay people for years and years in retirement like it does now thanks to advances in medicine.  Only a matter of time until it goes belly up...

toady's picture

And it worked like that for males, and it's still close to working that way for males. Both of my grandfathers, and my father, died within a year of retirement. that's why I retired early, ten years ago, had to beat that game!

The women, on the other hand, last into their nineties. 

True Blue's picture

A bigger problem is that so many went from 'unemployment' to social security 'disability' for some make-believe 'illness' (a perfect example is Jesse Jackson Jr. who was caught with his pants down, auctioning the Zero's Illinois Senate seat, ran (out of state) to hide from the charges in a 'mental institution' where he was diagnosed as 'disabled' and began ringing the cash register to the tune of $7,500 a month from the taxpayers via Social Security 'Disability' and his retirement package from the (insolvent) Illinois taxpayer.)

looseal's picture

It was not just death, but disability too.  The older you are the harder it is to recover from injuries.  And when SS first started most jobs were manual labor.  

Then widows, widowers and children's disability were added.  

TheMeatTrapper's picture

Very true mtl4. 

My wifes family is from Iowa. They grew up in the whitest State in the nation and have no experience with minorities. They graduated high school and went to work for John Deere painting tractors green. They made great union backed wages, bought houses that skyrocketed in price, retired with a fat pension, Social Security and sold their houses for a fortune. They moved to Florida and therir biggest decision each day is whteher to play golf or go out on the boat.

They are die hard Dems. The "system" worked for them. Get up, go to work, and life is great. 

They cannot comprehend that they are the exception in history. They cannot comprehend that one gerneation later, I will never retire. They cannot comprehend that there is an ever smaller class of working, productive people that has to pay the bills for everyone else. They cannot comprehend that their reality is fueled by a currency that is bankrupt. 

They see no need to set aside an inheritance for their grandkids, because all they have to do is graduate high school, learn a trade and get a job; so they are blowing every penny that they have, as fast as they can. A new Cadillac SUV eveery other year, the latest big screen TV, you name it.


Robert Trip's picture

Stop whining.

Covet ye not their good fortune.

Pull yourself up by your bootstraps, stand straight and proud and make it happen for you.

adanata's picture


Good HH... too bad those folks don't read ZH and have no idea what money is. :/

hedgeless_horseman's picture


Good HH...

These three down-voters do not agree with you or me.  I wonder why.  Maybe they are relying on someone else like the government to take care of them in their old age?


chunga 09/20/2016 - 15:36  Pay yourself first every -1


J Pancreas 09/20/2016 - 16:03  Pay yourself first every -1


VD 09/20/2016 - 16:02  Pay yourself first every -1

SubjectivObject's picture

And, if you don't hold recorded paper wealth, you can contribute to dragging the reported numbers down big time.

nyse's picture

You guys think this will end well, or what?

hedgeless_horseman's picture


No, I think it is likely to be a giant shit show.

Perimetr's picture

Put the $2500 in guns and ammo and when the SHTF

go visit your neighbors

Never One Roach's picture

Exactly. You don't need to stock up alot just a good revolver or .45 and know a neighbor who has stocked up. They'll be happy to share.

MisterMousePotato's picture

"Social Security ... will run out of money by 2034."

This is not a true statement.

It would be correct to say that, if nothing changes, Social Security will not have the money in 2034 to continue paying the same benefits as it is now. Even then, it assumes something preposterous; viz., that Congress will stand by and do nothing to fix (even temporarily) Social Security.

I doubt there is even one person on this planet who has a lower opinion of our do nothing Congress and the Federal Government generally than me; even so, that is not believable.

True Blue's picture

They will just print MOAR.

Even then, it assumes something preposterous; viz., that Congress will stand by and do nothing to fix (even temporarily) Social Security.

The problem with that train of reasoning is that CONgress already stole the Social Security fund and replaced it with a big fat IOU during what -Reagan's term, or was it Boosh the First?

They will just print MOAR -and pat themselves on the back for hitting their 'target' of silently taxing everyone with more inflation.

Excursionist's picture

Completely agree.  The presidential election of 2032 will have social security as a central theme, and neither he / she / zim / zir / it nor any member of Congress wishing to get (re)elected will oppose a bailout.

looseal's picture

By 2034 half of the boomers will be dead and the other half in nursing homes.  

Manthong's picture

Heh heh…ho ho.. $ 2500  is about what the Affordable Obamacare Act is going to cost the average American worker soon… PER MONTH.

F…  I am so glad I do not contribute a whole bunch to this boondoggle anymoar.  

But at least we will have subsidized healthy military age refugees running all over the place.


toady's picture

Race to the bottom. Americans will be collecting sticks to stay warm and eating their pets, like the Chinese, before they "retire".

hongdo's picture

Exactly.  If wages are normalized throughout the world, your only recourse as a SS retireee is to expat and normalize your cost of living.  Other places in the world in addition to being cheaper are also more fun than in the Good ole PC USA.  Your safety level may vary but what the hell you are old already anyway and Chiraq is at hand.



ShrNfr's picture

Invested in a 10 year T-bond that is ~1,600 a year for the 55+ set with a retirement account. They better like cheapshit cat food.

Syrin's picture

They probably shouldn't have bought that BMW back in their 40's that they couldn't afford.  Just gotta keep working.   "Welcome to WalMArt".

JRobby's picture

Wal Mart terminating greeters, replacing with armed guards in early 2017

Never One Roach's picture

Well, at least Americans can take solace in Obama spending a Trillion a year on the military and bombing a distant country and desert caves, instead of on the health and well being of American citizens.


That's something, right?

Herd Redirection Committee's picture

From biggest creditor nation prior to Reagan to biggest debtor!

I'm sure it was all just an accident of fiscal and monetary policy, not a deliberate gutting of the American Middle Class!  But hey, I here's China's economy has grown 10 fold in the last 20 years, so we have that going for... err... us???

toady's picture

"Voodoo economics". You hardly hear that anymore. They blame Nixon and the gold standard, the creature from jeckle  island, Obama, but never saint Ronnie. 

BandGap's picture

And I'm making that stretch by adding rice!

toady's picture

I prefer kennel ration.