American retirees are in the worst shape in decades … but a free, live event this Thursday will introduce you to a powerful income strategy that can help

 

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This past fall, The National Institute on Retirement Security published a terrifying report on the American retirement.

And although I’m immersed in the investment and finance world, the results floored me.

The typical working American has no retirement savings.

You read that right — none.

According to the Institute, when all working age individuals are included in the study — not just those with retirement accounts — the median retirement account balance is $0.

Keep in mind, this is the median number — which means that half of Americans actually have negative savings, meaning debt.

(Forbes recently reported that revolving debt, such as credit card debt, is now valued at more than $1 trillion — which is more than the all-time high set before the financial crisis.)

Of the Americans that do have retirement savings, can you guess what that amount is on average? $40,000.

Let’s put this number into perspective. For a retiree needing income for living expenses, what would $40,000 in savings contribute?

According to the FDIC, as of February 13, 2019, the national average interest rate on savings accounts stands at 0.09%. This means that $40,000 — which, remember, is great compared to the median savings of $0 — is going to spin off a whopping $36 in interest.

***The grim reality facing the average American

We’re not earning enough … we haven’t saved enough … health care costs are rising faster than inflation … Social Security isn’t replacing pre-retirement incomes … and bond and conventional stock yields aren’t contributing enough to offset the income gap.

So, what’s the result?

Americans today are facing a retirement crisis so dire that more than one in three retiring Americans will find themselves in or near poverty in the next 10 years.

That statistic comes from the Harvard Business Review.

It recently reported that social security income minus Medicare premiums only covers about 29% of the pre-retirement income of the median worker (that’s down 40% from twenty years ago).

Of course, 29% sounds low, but just how low is it really? What does that number actually mean?

According to The National Institute on Retirement Security, in order to maintain the same standard of living in retirement, the typical American needs to replace approximately 85% of pre-retirement income.

We need 85%, but we’re getting 29%.

In other words, there’s a retirement income shortfall of greater than 50%.

Even worse, many financial planners say 85% of pre-retirement income isn’t enough — it should be 100% for at least the first 10 years of retirement.

That’s because spending doesn’t really slow down at the beginning of retirement.

That means you could be spending down the very savings you need to be growing, so that it can fund your later retirement years. In other words, you’re eating your seed corn.

This leads us back to the frightening conclusion from the Harvard Business Review:

Based on these trends, we predict the U.S. will soon be facing rates of elder poverty unseen since the Great Depression; in fact, one study shows that more than one in three retiring Americans will find themselves in or near poverty in the next 10 years.

The Harvard Business Review isn’t alone in reaching this grim takeaway. This past March, Forbes ran an article detailing the problem called “The Retirement Crisis Is Much Worse Than You Think” which included a sobering statistic:

Every day, some 10,000 baby boomers turn 65, and they’re reaching retirement in worse financial shape than the previous generation for the first time since Harry Truman was president.

The National Institute on Retirement Security report puts actual numbers on this — even after counting an individual’s entire net worth — which is a generous measure of retirement savings — 76.6% of Americans are falling short of retirement savings targets.

***While we could all be better at saving, part of the problem isn’t your fault at all — it’s based on stagnant wage growth

A January MarketWatch report highlighted that when adjusted for cost of living increases, real wages actually declined 1.3% since the end of 2017.

This is counter to what the Bureau of Labor Statistics (BLS) reports, but that’s because the BLS number doesn’t account for inflation. Plus, the number used by MarketWatch (which comes from PayScale) looks at median wages, not average wages. The benefit of using median wages is that a huge outlier wage doesn’t bias the results, pulling them all higher.

So, our wages aren’t buying as much goods and services as they did before … perhaps part of that is due to skyrocketing costs.

According to the same article, average monthly rents have risen 28% over the last 10 years, and health care costs have soared. Specifically, employer-sponsored insurance premiums increased from an average of $6,000 in 1999 to more than $18,000 in 2016.

***And don’t make the mistake of thinking social security will bail you out

It’s no secret that social security isn’t viable in the long-term in its current form.

According to The National Institute on Retirement Security, the program has enough resources to pay scheduled benefits until 2034. But after that, it will only be able to finance 79% of benefits.

So, that 50%+ income gap we identified a moment ago is only going to get worse.

And at the same time in which we’ll be seeing our incomes drop, it turns out we’ll be living longer, which will put an even greater strain on that income.

The average life expectancy of people who live past age 65 has been steadily increasing. A Forbes piece from this past January noted that at the retirement age of 65, it is likely that at least one spouse will live into their 90s. In fact, there’s a 25% chance that one partner will live past 96.

This means that the typical 65-year old retiree has a 1-in-4 chance of needing to be able to fund 31 years of additional life.

Of course, this can be hard to grasp conceptually, so let’s put some real numbers on it.

The American Association of Retired Persons (AARP) published a hypothetical on the topic. For a retiree to generate just $40,000 a year after retiring, he/she will need savings of roughly $1.18 million to support a 30-year retirement. This is based on 6% average returns, using an inflation rate of 2.5%.

So, the first question is “can you maintain your current lifestyle on a $40,000 income?”

If yes, then wonderful for you — but the follow-up question is “have you saved $1.18 million?”

According to the statistics, it’s unlikely.

So, the core issue for most Americans in, or approaching, retirement reduces to this:

We can’t change the past — meaning we can’t alter the reality that we haven’t amassed enough savings up to now — which means we can only focus on the future. So, how we can we begin generating more incometoday in order to help us sidestep tomorrow’s retirement crisis?

***With this question as our backdrop, I’m genuinely excited to tell you about a live, free event happening this Thursday

In two days, we’re set to share the details of a huge project we’ve been working on for over a year. More than a dozen of our top staff members have put in enormous amount of work into this project.

The result is an absolutely world class investment system … one that could generate tens of thousands of dollars — if not hundreds of thousands of dollars — in annual passive income you can use to live comfortably, and on your own terms, for the rest of your life.

It involves something our team has coined the Utah Income Secret.

Those of us at InvestorPlace have seen how regular Americans are enjoying this secret’s transformational effects on retirement and retirement income. The people using this secret have become sort of an underground American cult phenomenon. The amount of extremely positive feedback has been incredible. While most Americans know nothing of this secret, a small group of regular folks are using it right now to generate low risk income that’s helping them combat the retirement crisis.

If you’re approaching retirement and you’re worried about running out of money — first, you’re not alone. A full 88% of Americans believe America is facing a retirement crisis.

But you’re not helpless.

Join us Thursday night simply to learn more. Again, it’s a free event, and there’s zero obligation of any kind. In fact, just for signing up to join us, you’ll receive a gift with a $200 value, yours to keep, no strings attached.

But I’m confident you’ll deem the real gift to be the market strategy that’ll be discussed.

Knowing it, then applying it over and over again could mean the difference between a comfortable retirement filled with abundance, grandkids, perhaps travel … or barely getting by, being one of the many who are worried about how to pay for basics like food and medicine.

Yes, Americans are facing a retirement crisis, but there is something you can do. And it starts simply by learning more at our free event this Thursday.

To secure your attendance, you can click here to register.

Hope to see you there.

Have a good evening,

Jeff Remsburg