Retiring Rich Is Looking Less Likely for These Americans

For every age group under 65, the prospects for a financially sound retirement have diminished over the past 15 years, new research shows.

Soaring student debt and falling access to employer-sponsored savings plans are two of the troubling trends putting a squeeze on younger groups' financial security, according to a study from the Stanford Center on Longevity.

The hardest hit age brackets have been millennials, in this case defined as those aged 25-34. The study said that group's financial security dropped 8%, on average, since 2000. Security for those aged 35-54 fell 7% over the same period, and was down 4% for those aged 55-64.

Only those age 65 or older have seen their financial security hold steady or rise modestly, on average, since 2000. Greater prevalence of traditional pensions in that group may help explain the stability.

The study looked at nine aspects of financial health, clustered in three groups: cash flow determinants (income, debt, emergency savings), assets (investments, retirement accounts, homeownership), and insurance (health, disability, life). Researchers compared data for each age group in 2000 and again in 2014. They found security had fallen in every category other than health insurance—and credited the Affordable Care Act for this one bright spot.

Overwhelming Debt

Debt was a key factor undercutting financial security for young Americans, the researchers found. About a quarter of Americans under 35 have debts in excess of 30% of their household income -- a share that's risen 136% in two decades, the study found. Among college graduates aged 25-34, student debt has risen five-fold since 1995 to about $24,000.

Many college graduates can handle the payments, and their degree puts them in a better position to earn more in the long term. But this debt forces them to delay savings and homeownership, in turn diminishing their long-term financial security.

The study also found that in every group under age 65, more Americans are living near or below the poverty line than in 2000.

And fewer Americans have an IRA or workplace savings plan. That last point is critical because 70% of folks who aren't eligible for a workplace plan have no retirement plan of any kind. Even among those approaching retirement age and participating in a work-based plan, savings rates are slipping: Just 58% are contributing 10% of their pay, compared to 69% doing so in 2001.

Crisis Ahead?

Taken as a whole the study illustrates woeful retirement readiness, especially among the younger generation. And it emerges as Americans are giving scant attention to other retirement issues -- including health and diet -- even though they expect to live to 90 or longer.

Remarkably, the vital issue of financial security is getting almost no airtime in the presidential debates. Democratic hopeful Bernie Sanders has said he wants to make college free, and a number of candidates have plans to help students with their debts -- which, ultimately, will improve the financial security of younger generations.

But there has been little discussion of Social Security, nor of how to get Americans to save more and secure enough lifetime income to sustain them through two or more decades after work.

Evidently, that’s much tougher than rhetorical bombast and empty promises.