op_ghilarducci1_Jeffrey GreenbergUniversal Images Group via Getty Images_USelderlyworker Jeffrey Greenberg/Universal Images Group via Getty Images
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The Perils of Retirement in America

America’s 40-year experiment with a voluntary, individual-directed, commercial retirement system has failed, with the vast majority of US workers unable to accumulate enough savings over their working lives to enjoy basic economic security in old age. Bold reform is urgently needed – and surprisingly possible.

BERKELEY – America’s retirement system isn’t working. It is failing older workers, pensioners, and would-be retirees, and if we don’t fix it soon, it will also fail future generations, lowering living standards and increasing the risk of poverty. This is mostly a matter of poor design. But rather than improve that design, policymakers have consistently pushed what can be described only as fake fixes.

The pension crisis that the United States is facing is, however, all too real. As I show in my new book Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy, tens of millions of older workers (aged 55 and up) – in fact, 80-90% of all working Americans – will have to keep working deep into old age if they want to maintain their pre-retirement standard of living.

The harsh truth is that if you are a middle-class worker in the US today, you are unlikely to become a middle-class retiree. Most people simply do not have enough savings to supplement Social Security, at least not to the extent that is needed to maintain their living standards. In fact, many retirees will end up living in poverty ($13,000-18,000 per year, depending on circumstances). In 2007-19, the share of near-retirees at risk of old-age poverty rose significantly.