The Retirement Crisis Is Still Ahead — and It's Gotten More Complicated

I wrote about the retirement crisis back in 2020. At the time, I pointed to underfunded pensions, rising debt, Social Security's long-term funding gap, and the shift away from employer-provided retirement security.

Six years later? Every one of those problems is still with us. And a few new ones have entered the conversation.

This isn't meant to be a scary article. It's meant to be an honest one. Because the people I work with — business owners, executives, professionals who've spent decades building wealth — are not immune to these structural forces. They're just better positioned to do something about it if they pay attention.

The Numbers on Retirement Readiness Are Still Grim

According to the Federal Reserve's 2023 Survey of Consumer Finances, approximately 28% of Americans over age 55 have no retirement savings at all. That's not a fringe statistic — it's more than one in four people approaching retirement age with nothing accumulated.

Among those who do have savings, the median retirement account balance for Americans aged 55–64 is roughly $185,000. The rule of thumb for retirement income — not universally true, but a reasonable starting point — is that you can safely withdraw around 4% of your portfolio annually. Four percent of $185,000 is $7,400 per year. That doesn't stretch far.

I'm not telling you this to make you feel good about where you are. I'm telling you this because the systemic underfunding of American retirement is real, and it creates pressure on systems — especially Social Security — that everyone depends on to some degree.

Social Security: Still Here, Still Uncertain

Social Security is not going away. Let me be direct about that. The political will to eliminate Social Security does not exist, and it never will — too many Americans depend on it, and politicians know it.

What is real is that the Social Security trust fund faces a long-term shortfall. The latest projections from the Social Security Administration suggest the trust fund reserves could be depleted in the mid-2030s — at which point, if nothing changes, benefits could be reduced to approximately 83% of scheduled amounts based on incoming payroll tax revenue alone.

Congress will almost certainly act before that happens. Changes might include adjustments to the full retirement age, modifications to the benefit formula for higher earners, or increases to the payroll tax cap. None of those changes are painless. Some combination of them is probably coming.

Inflation Made Everything Harder

The inflation surge of 2022–2023 introduced a generation of near-retirees to something retirement planners have always worried about: purchasing power erosion. Even at more moderate inflation levels, the compounding effect over a 20 or 30-year retirement is significant.

A retiree spending $6,000 per month today will need roughly $8,100 per month in 10 years just to maintain the same lifestyle — assuming 3% annual inflation. In 20 years, that number climbs to over $10,800. An income plan that looks comfortable at retirement can quietly become uncomfortable over time if it doesn't account for inflation.

This is one of the reasons I've always advocated for income plans with growth components — not just fixed sources. Social Security has COLA adjustments. Annuities with inflation riders exist. A diversified portfolio can grow. But a purely fixed-income retirement plan in an inflationary environment is a slow-motion problem.

Pensions: Almost Gone, But Not Forgotten

According to the Bureau of Labor Statistics, only about 15% of private sector workers today have access to a traditional defined-benefit pension. That's down from over 80% in the early 1980s. The shift to defined-contribution plans — 401(k)s — put the responsibility for saving, investing, and managing longevity risk squarely on individuals.

Many of the executives and business owners I work with have 401(k) balances that are large in absolute terms but represent the product of decades of decisions, contributions, and compounding. Those balances don't come with the income guarantees that pensions provided. Converting a large account balance into reliable, sustainable income — without running out of money — is the central challenge of modern retirement planning.

People Are Living Longer, Which Changes Everything

Life expectancy for a 65-year-old American today is approximately 84 for men and 87 for women, according to the Social Security Administration's actuarial tables. But those are averages. A healthy 65-year-old has a meaningful probability of living into their 90s — and some will reach 100.

Longevity is a gift. It's also a financial planning challenge. An income plan designed to last 20 years may fall short. Healthcare costs tend to increase significantly in later years. Cognitive decline can complicate financial decision-making. Long-term care needs can be substantial.

Outliving your money is consistently cited as the number one fear among people approaching retirement. It's a well-founded fear — and it's the reason that building a retirement income structure designed for a long life is so important.

The Good News

The retirement crisis is real at the population level. But at the individual level, it's solvable — for people who take it seriously and build a real plan.

The people I worry about are those who assume that what they have will be enough, without ever actually running the numbers. The people who depend entirely on a system — Social Security, a pension, a rising market — without building any structure around what happens if those systems don't deliver exactly as expected.

A well-designed retirement plan accounts for inflation, longevity, healthcare costs, tax changes, and market volatility. It builds in resilience. It doesn't bet everything on one outcome being true.

That's what I do for people. And it starts with understanding where you actually stand.