How to Make Sure the Retirement Crisis Doesn’t Happen to You

Why Boomers Won't Retire

Portrait of young woman embracing senior man at the window

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The average life expectancy at birth in 2020 was 77.3 years, according to the Centers for Disease Control and Prevention. Most people would like to retire as early as they can. For example, if you'd like to retire at 62 years of age, you would need to have at least 15 years' worth of funding saved up. Unfortunately, only about half of Americans will have enough to maintain their planned standard of living, according to a 2019 report by the Center for Retirement Research at Boston College.

The 2008 financial crisis affected many people's retirement plans, as most families saw their net worth plummet along with the stock market and housing prices. When the Federal Reserve lowered interest rates (common monetary policy in a recession), it created an environment where savers received a much lower return on fixed-income investments. At the same time, many investors became fearful of re-investing in stocks.

Longer life expectancies, less help with retirement funding, and economic and global circumstances are making it more difficult to retire. Here are some of the causes of this retirement crisis, the effects, and what you can do about it to come out on top.

Saving for Retirement

Do you have a retirement plan? If not, you're not alone. More than half (56%) of all workers in 2019 didn't know how much they would need to save for retirement. Perhaps that's why 28% of workers have not personally saved any money for retirement, and 27% reported that the total value of their savings and investments—excluding their home—was under $25,000, as of 2021. 

To avoid this circumstance, first, you'll need to reduce your debt and determine how much money you'll need to retire. To sustain your standard of living, you should plan on 10 times the annual salary of your final working year.

Second, you shouldn't take money out of your retirement plan, even in an economic downturn. The challenge here is that as the markets fluctuate following global and economic circumstances, the value of your retirement plan may drop. It can be tough to ride out the downswings and resist the temptation to cash out your 401(k).


Continue making contributions to your retirement plan during market downturns, if you can afford it.

If you contribute to your retirement plan during down times, you'll be purchasing investments at lower prices. When the market reverses again, your retirement plan value will increase as well because the prices of your existing investments will rise. This is known as dollar-cost averaging.

Third, contribute more than the minimum to your plan and save outside of it as well. This will accelerate your earnings—and if your employer matches your contributions, it can further speed up your returns.

Fourth, use a Roth IRA instead of a regular IRA. Roth IRA contributions are after-tax contributions, so you pay no taxes when you take distributions. This keeps you from having to calculate for and worry about taxes in retirement.

Early Retirement

Many people simply assume that if they don't have enough to retire, they will just keep working. Unfortunately, many workers will not be able to complete this plan, due to circumstances outside of their control. Some are forced into early retirement because their employer is restructuring or downsizing. Some have sick parents or spouses that need care. Others need to quit working because of their own illnesses.

The Employee Benefit Research Institute (EBRI) found in 2020 that nearly half (48%) of workers retire before they planned to. This means that workers will need to work more or harder to be prepared financially for retirement.

Working While Retired

You've probably noticed that older grocery store clerks are replacing teenagers. More and more women age 55–64 continue working, delaying retirement. At age 65 and above, both genders are working more than in the past.

The Bureau of Labor Statistics (BLS) forecasts that by 2030, the number of workers over 55 will grow to comprise 25.1% of the labor force. These workers will be in service sector jobs, where most of the job growth will occur. Many of these jobs—such as grocery clerks, waitresses, and substitute teachers—were generally held by younger people in the past.

According to EBRI, 71% of workers surveyed in 2020 expected to work for pay in retirement. Many retirees also claimed to work for pay in retirement (31%). The anticipation of needing to work for pay in retirement stems from the belief that retirees may have no other choice because they won't be able to afford to fully retire.


Social Security may not be a reliable option in the future. The Old-Age and Survivors Insurance trust fund is predicted to run out of funds by 2033, and the Disability Insurance trust fund will likely be depleted by 2057.

Another reason workers at the lower end of incomes can’t afford to retire is because Social Security is facing shortages, which means that benefits may be reduced. This will especially affect workers who are forced into early retirement.

If workers are forced to retire early, they might also be forced to tap into their Social Security benefits. The earliest you can begin to withdraw from social security is age 62; however, this can result in a benefit drop of nearly 30%. If you are forced to retire and draw benefits, you are still able to work but your earnings will be limited. If you earned more than $18,960 in 2021 and draw Social Security, you will have $1 deducted from every $2 you earn above the limit.


If you earned $18,972 in 2021 while drawing Social Security, you would have $6 deducted from your benefits.

After the stock downturn in 2000, many people who were burned by the stock market put their money into their homes. Many Boomers lost their retirement savings and their homes during the 2008 financial crisis. Those who lost their jobs as well had no choice but to take whatever work they could to survive.

Effect of Income Inequality on Retirement

Women, on average, live longer than men do, and are still not paid equally. The U.S. Bureau of Labor Statistics reported in July 2021 that women 25 years of age and over, working full time, made a median wage of $210 per week less than men of equal work status. Of workers with advanced degrees, the lowest 25% of female workers made a median wage of $330 less than the men in the same quartile.

The top 20% of households with the most income took in more in 2018 than the other 80% combined—and the imbalance continues to grow. While the top percentage of household earners continue to make more gains, middle-class incomes are slowing in growth with the size of the middle class shrinking.


As the dollar continues to lose value, and the cost of living continues to increase, workers are not gaining wage increases at the rate of the top earners.

With wage growth stagnating, the cost of living becoming more expensive, the gap between the top earners and low earners widening, and the differences in pay between genders, it is becoming more difficult for certain demographics to save for retirement.

Women will need to save more on average than men for retirement for the reasons mentioned previously. Regardless of gender and pay inequalities, workers in the shrinking middle tier and growing lower-earning tiers will have to reduce their expenses to save more for retirement.

Organizations such as the Haas Institute for a Fair and Inclusive Society and the Organisation for Economic Co-operation and Development (OECD) have been working to promote ideas that can combat the disparities in income. The OECD has suggested that governments need to work to respond to the inequality of income by implementing policies to promote job growth, limit tax breaks for high earners, and promote education, skills, and training.

Preparing for a Planned or Unplanned Early Retirement

Most people tend to put off retirement planning until it is almost too late. To keep yourself from not being able to retire, or being affected by an unexpected early retirement, there are a few steps you can take. The first should be to start early.

Next, your health should be one of your main concerns. Keep yourself healthy by following your doctor's advice for medication, exercise, and diet. If you have loved ones who might need care, look into long-term care insurance for them before they need it, and work with them to fund it.

Take control of your career and income by preparing yourself for downsizing or layoffs, and prevent obsolete skills by making yourself more valuable to an employer. Find methods to improve yourself professionally, and begin your own career planning by setting some career goals.

Then, look into some methods for planning retirement. There are a few simple steps to laying out a general plan to get started.

  1. Determine how much debt you have, and create a plan to pay it down or off. See a financial advisor if you need assistance.
  2. Figure out how much you need in income after retirement. Estimate your monthly expenses, ensuring you account for healthcare costs, non-necessities, and some activities you'd like to do. Estimate how much you'd need for one year.
  3. Pull out your most recent Social Security statement, or go to the Social Security Administration's Benefits Calculator and get an estimate of how much you'll receive in benefits.
  4. Subtract your annual Social Security benefit from the annual income you'll need in retirement.
  5. Add in any annual pension amount you expect to receive, as well as any other sources of income you anticipate.
  6. Multiply the amount by the number of years you anticipate being retired. This is how much you need to have saved up, either in savings or invested in stocks and bonds.
  7. Look for more ways to reduce expenditures or increase your income before you retire, and work to save as much as you can—while finding ways to make your money work for you. Look into other investment instruments that can help you grow your assets, and work to establish a nest egg for a comfortable one.
  8. Talk to a financial planner if you need assistance in creating a plan.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Centers for Disease Control and Prevention. "Provisional Life Expectancy Estimates for 2020," Pages 1-2.

  2. Center for Retirement Research at Boston College. "How Would More Saving Affect the National Retirement Risk Index," Pages 1, 5.

  3. Northwestern Mutual. "Planning & Progress Study 2019," Expand "Work and Retirement."

  4. Employee Benefit Research Institute. "2021 RCS Fact Sheet #3 Preparing for Retirement in America," Page 2.

  5. Internal Revenue Service. "Traditional and Roth IRAs."

  6. Employee Benefit Research Institute. "2020 Retirement Confidence Survey Summary Report," Page 11.

  7. U.S. Bureau of Labor Statistics. "Why Are Older People Working Longer?"

  8. U.S. Bureau of Labor Statistics. "Civilian Labor Force, by Age, Sex, Race, and Ethnicity."

  9. Social Security Administration. "A Summary of the 2021 Reports."

  10. Social Security Administration. "Social Security Benefits: Early or Late Retirement?"

  11. Social Security Administration. "Benefits Planner: Retirement."

  12. U.S. Bureau of Labor Statistics. "Usual Weekly Earnings of Wage and Salary Workers Second Quarter 2021," Pages 6, 9.

  13. Pew Research. "6 Facts About Economic Inequality in the U.S."

  14. Organisation for Economic Co-operation and Development. "How Can Governments Respond to Income Inequality?," Page 80. Download PDF.

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