A recently released Bankrate survey reports Americans are saving little or nothing of their annual income and half could end up struggling in retirement.
20% of those surveyed save 0% of their annual income while those who do save were found to not be saving enough. Experts recommend setting aside 15% of one’s annual income, but of those surveyed– 16% report saving at the 15% level, 25% report saving 10-6%, and 21% save 5% or less.
The survey notes those 55-64 years of age, who do have retirement savings, have a median savings of $120,000, and those 65-74 years old have saved a median of $126,000. Even when factoring in Social Security, these reserves will not last long in the absence of paychecks ($1,342 is the 2017 average monthly Social Security benefit) exposing seniors to the risks of a lower standard of living in retirement and/or an inability to afford an emergency expense.
Another risk retirees must consider is the potential need for long-term care and the associated cost. Assisted living is an increasingly popular option within the continuum of long term care. CARR recently received funding from The San Diego Foundation to examine the affordability of assisted living in San Diego. The median lifetime cost of assisted living in San Diego is estimated as $88,000 or $4,000 per month for 22 months. CARR’s Assisted Living Accessibility study found 32 of San Diego’s 39 communities have 20-60% of seniors, 65 years and over, unable to afford lifetime assisted living costs, even when factoring in home equity.