00:00 Josh
Well, for Americans banking on using social security as the primary source of income in retirement should think twice. Here to detail the expectations versus reality is Yahoo Finance’s Kerry Hannon. Kerry, it’s good to see you. Stat that immediately jumps out from your story, Kerry. More than four in 10 America workers over 55, four in 10 expect social security to be their primary retirement income. What do you make of that, Kerry? And is that, is that a big change, Kerry from maybe what we saw five years ago or 10 years ago?
00:27 Kerry Hannon
Yeah, Josh, great to be here. And and yes, in fact, it is. This, uh, this whole idea of social security being the primary income has been steadily ticking up over the last five years or 10 years. And a big reason for that is because, uh, well, there’s two reasons. The pension, uh, for the generation kind of prior to this, pensions were more in place. So there wasn’t such a concern that social security which was designed to be a supplemental income for seniors in addition to uh outside savings, pensions, and so forth. It was never supposed to be the primary income for seniors. But but as pensions have gone away and the do-it-yourself retirement has jumped to the forefront, this group of uh, of workers, 55 and up, they’re the older Gen Xers and the younger boomers primarily, who were the first experimenters at this do-it-yourself retirement with the 401K. And many are just very concerned that they’re just not going to have enough there that’s going to be able to support them. I will say quickly that even today, Josh, many seniors do depend on social security as their primary income. And in fact, um one and four say it’s about 50% of their income and about um one in four say it’s also 90%. So you’ve got two big cohorts that are depending on social security right now, but this new one, this is a big number.
01:54 Josh
Another stat in your story, Kerry that struck me, seven in 10 workers say they’re behind on retirement savings. What explains that, Kerry, do you think?
02:11 Kerry Hannon
I know. Josh, I feel like you and I have this conversation a lot. It is today. It’s the reality of today’s cost of living. I mean, people aren’t saying they’re abandoning retirement saving. They’re simply saying they’re postponing it because they’ve got real payments that they have to make today for, you know, car loans, for healthcare, for housing. These are basic everyday expenses that they’re grappling with and they’re saying, hey, hey, I can’t set money aside for retirement right now. And so I do feel unprepared.
02:45 Josh
If someone’s watching right now, Kerry, I you know, let’s say they’re, you know, they’re 55 or 60 and they they fall into this group, right? They’re they feel like they’re behind on their on their retirement savings, Kerry. What can they do? What should they do?
03:00 Kerry Hannon
Yeah, pay attention. Buckle down, do a budget. Where can you squeeze out something? Don’t abandon retirement savings. You not you’ve got to keep putting stuff aside because with longevity, you could have a lot of decades to two or three decades ahead of you. So do that, do catchup contributions wherever you can in your retirement plans, in your individual retirement account, in your 401K, wherever you can do those catchups which are helpful. Um and also no one wants to hear this, but start thinking about how you might earn income in retirement even as a consultant or contractive. You start a couple of years ahead of time to figure out how can I get some income as a safety net during my retirement years, at least those early years. This will give you a little ballast to help you move forward with a bit more confidence.
04:14 Josh
What about younger Americans who are watching this right now, Kerry? Should they still assume, you know, social security, yes, it’s going to be there when they retire?
04:24 Kerry Hannon
Um, isn’t that the million dollar question? It is such a, gosh. I mean, it’s hard to say. Josh, my gut sense and all the experts I’ve spoken to say, yes, in fact, social security is not going to way, they going away. They are going to Congress is going to find a way to make this program, uh, stronger and still be there for the younger workers coming up. But let me tell you, in reality, this cohort and based on this this survey that we looked at with the older workers expecting it to be a primary income. The truth is the younger people get it. Only 22%, so roughly two in 10 said, uh, between the ages of 35 and 54 said they expected it to be their primary income in retirement. And those under 35, it was just 12%. So it’s almost they’re not planning on it quite as much.
05:22 Josh
Kerry, as always, great to have you on the show. Thank you.
