Looming Catastrophe Boomers to be Destitute

According to Fidelity Investment’s president of asset management, Ronald P. O’Hanley, a catastrophe is looming for millions of baby boomers that are ill prepared financially for retirement. He stressed the fact that not only are boomers not prepared financially for retirement, but exacerbating the problem is the fact that life expectancy for boomers is longer than previous generations. Consequently, living a destitute old age is entirely within the realm of possibility for millions of Americans.
boomers broke
O’Hanley was speaking at the Capital Markets Summit sponsored by the U.S. Chamber of Commerce in Washington when he made his remarks.

Some of the reasons O’Hanley cites as being contributing factors to this reality is the demise of the employer funded pension plans in favor of the employee funded or self directed retirement plans, along with the low level of “financial literacy” of U.S. residents in general. He said “In our schools we teach children about sex and drugs but not about money.”

Fidelity’s Research

He pointed to research conducted by Fidelity which shows the following dismal statistics:

Nearly 4 in 10 retiree households do not have sufficient income to cover their monthly expenses. Well over half of all Americans have less than $25,000 in total savings, not counting the value of their primary residence or pension plans. And 28 percent have put aside less than $1,000.

And these are the people who have access to an employer-sponsored retirement plan. More than 1 in 3 working Americans don’t even have that, including the federal tax deferrals and often the employer contribution matches that plans offer.

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