new york
CNN
—
Eric Payne, a 37-year-old single father of two boys, works hard to increase his weekly paycheck. He calls this “clicking.”
He earns a good salary in the $80,000 range, but by the time all his necessary expenses are covered, he has little to no spare time.
“Clicks are for day-to-day operations,” said Payne, who works as a quality assurance manager for a seafood wholesaler near Portland, Maine.
“Think of ways to cover groceries, car payments, mortgage, children's clothes, childcare, or unexpected bills.”
click. click. click. click. click. click.
“My financial focus has to be on the present because every penny matters,” he told CNN. “But I am fully aware that I will be creating other problems for myself in the future.”
For now, his Retirement plans are put on the back burner.
He says it's impossible to budget for the future. “You might think it's a constant battle and it feels like you're always being kicked. You think you've managed to cope, but then something else comes up that you have to deal with.”
Between my 401(k) at my previous job and my current company's employee stock ownership plan, I have less than $10,000 saved up for retirement.
But he says he has no plans to stop working at age 65 and will have to continue earning as much as his health allows.
Payne is not alone.
The number of U.S. workers age 75 and older entering the labor market is expected to nearly double over the next decade, creating an impending retirement crisis.
Saving for retirement has long been viewed as a three-legged chair in the United States. Americans had pension plans, Social Security benefits, and defined contribution plans like 401(k)s. No more.
Pension systems have almost disappeared. In the mid-1980s, about half of private sector workers were covered by so-called defined benefit plans, but by 2022 only 15% of private sector workers were covered by such plans.
According to a survey by the Social Security Administration, Social Security benefits still support about 90% of the income of more than a quarter of seniors. But the Social Security Trust Fund faces a 75-year deficit and, without intervention, will be depleted by the mid-2030s, leaving retirees with only a fraction of their expected benefits. Lawmakers have faced a decades-long political impasse over how to resolve it.
What remains is a 401(k), which 68% of private industry workers have access to but only 50% use.
BlackRock CEO Larry Fink said last week in his annual letter to investors that there is a “systematic, high-level effort” to get corporate leaders and politicians to rethink retirement in the United States. He warned that if we don't address this, we risk alienating younger generations from capitalism and politics.
“No wonder younger generations, Millennials and Gen Z, are financially insecure,” he wrote. “They believe that my generation, the baby boomers, are so focused on their own financial well-being to the detriment of those who come next. And in the case of retirement, they're right.”
Fink suggested raising the projected retirement age beyond 65 and said increasing access to investments and 401(k) plans could help solve the problem.
It would also help Fink, More than half of the $10 trillion in assets managed by BlackRock is subject to retirement.
But for many Americans, saving for retirement is a distant idea. According to Bankrate data, only 44% of American adults can afford an emergency expense of $1,000 or more from their savings.
High inflation, student loan payments resume, economic collapse Pandemic-era savings mean more Americans are strapped for cash.
A recent Vanguard study found that many people prematurely tap into their 401(k) accounts due to financial hardship and end up paying hefty penalties.
Jamie is a 54-year-old single mother who works as a legal administrative assistant in Central Texas. There were many times when she had to rely on her 401(k) retirement funds to support herself and her son.
The first time was right after I gave birth to my son. Jamie had a job with no maternity leave policy. The day she returned home from her hospital, she received a letter from her employer informing her that she would not have her job secured during her scheduled vacation period.
“I wasn't working and his father wasn't around so I couldn't help. “It was my first time stepping into a 401(k),” she said.
A few years later, she re-entered between jobs. She needed the money to cover expenses, finance a move and pay off credit card debt, she said.
Jamie, who spoke to CNN on condition that his last name not be used, is still living off his paycheck and has about $15,000 left in his 401(k).
“That’s all I have,” she said. “I mean, that's not enough. But there's nothing I can do for now.”
Americans head to the polls this November with the retirement crisis in mind.
Former President Donald Trump suggested on CNBC last month that he was open to cuts to Social Security and Medicare.
“There's a lot that can be done about the reduction of rights, and even the theft and mismanagement of rights,” Trump said.
After the interview, President Joe Biden responded to a clip his campaign produced of Trump's comments, saying it was “not on my watch.”
Trump campaign spokeswoman Caroline Leavitt later told CNN that the president was “clearly talking about reducing waste, not rights.”
In December 2022, the Biden administration signed SECURE 2.0, encouraging employers to offer retirement plan benefits to employees and removing some barriers to savings. Late last year, the administration proposed rules to limit junk fees on retirement investments.
Meanwhile, Vermont Independent Sen. Bernie Sanders sounded the alarm on retirement last month when he chaired a hearing on the status of his retirement. Sanders noted that about a quarter of seniors live on less than $15,000 a year.
The former presidential candidate argued that companies should reinstate their pension plans, a notable difference from the investment programs BlackRock's Fink advocated in his letter.
Voters are paying attention to these differences.
Beth, 60 year old administrative assistant Pittsburgh told CNN he pays close attention to what each candidate, from presidential candidates to dogcatchers, say about retirement.
She has about $360,000 saved in her 401(k), which she knows is better than average. Still, she says, “I have no illusions that it will be enough.”
Beth, who asked that her last name not be used, also told CNN that she plans to work until at least 65 to qualify for Medicare, but added, “Are you kidding me?” I'll work,'' he said.
She has yet to find a political candidate with an attractive retirement plan.
“I hope things get better, but I don't know what will happen at this point,” she said. “I definitely don't want it to get any worse.”
