Worried they will not have adequate savings for retirement, older adults are staying in the workforce longer. And according to a recent World Economic Forum report, the concern over living longer than your retirement savings will support is valid; with greater life expectancy seniors could outlive their savings by as much as 10 years or more.
As reported by Bloomberg Wealth, in the United States 65 year-olds on average have enough savings for just less than 10 years of retirement and with many older adults living well into their 80s and 90s, some seniors will be forced to work longer or spend less.
Women, who live longer than men are at greatest risk for financial insecurity in older age; the retirement savings gap in Japan for women can be up to 20 years. Japan has the highest life expectancy for women in the world; 87.1 years and 81 for men. Japanese workers save like in other countries but are generally very conservative with their investments, yielding lower returns which compounds the problem.
Worldwide, employers and governments have started shifting the financial responsibility of saving for retirement onto the individual worker, but the findings of the forum’s report recommend that employers do more to improve retirement plans and investment options for workers. Many companies do not automatically enroll their employees in a retirement savings plan; policy changes that help workers plan and save for an increasingly long retirement will help ensure fewer seniors outlive their savings.
For the purposes of the report, the common starting wage was assumed at $30,000 with workers making retirement savings contributions starting at 3 percent, increasing annually by 1 percent each year up to 9 percent. The forum also assumes working life to begin at 25 and retirement to be at age 65.
Greater longevity is wonderful however funding a longer old age and finding affordable accessible housing continues to be a growing concern for adults planning for retirement. Learn more about how much you will need to save for retirement by age 67 by checking out this retirement calculator by Nerd Wallet.