25 Reasons Why Retiring Is Harder Than It Used to Be

At one time in our history, retirement was a given, an all-but-assured final chapter after years of working hard. While some people might choose to work past 65, many look forward to leaving the work force. Today, enjoying one's golden years work-free has become an unattainable dream for many — even if you find a great place to retire. According to a Northwestern Mutual study, nearly 8 in 10 Americans are extremely or somewhat concerned about affording a comfortable retirement. Here's a closer look at what's impacting our ability to retire based on input from financial experts across the country.

Editors' Note: A previous version of this story incorrectly identified Patricia Russell as a certified financial planner. She is not. Information attributed solely to her has been removed from the story.

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People are living longer than they once did, which means having to save for a longer lifespan in retirement, says Danielle Roberts, a Medicare expert and co-founder of Boomer Benefits. "Our retirement savings must factor in housing expenses, utilities, lifestyle and healthcare costs, which many Americans just aren't prepared for financially by the time they reach 65," she says.

One of the biggest reasons retirement is harder now than in prior generations is the spiraling cost of higher education, says David Flores Wilson, a certified financial planner, chartered financial analyst, certified divorce financial analyst, and editor of Planning to Wealth. "The cost of college is dramatically higher than inflation over the last several decades, and many families have prioritized paying for putting their kids through the college of their choice over their own retirements," Wilson says.

A challenge that goes hand in hand with the skyrocketing cost of college tuition is the associated student loan burdens that burdens both parents and graduates. In fact, a recent study found that parents are putting off retirement in order to pay for student loans. "Student loan debt stands at $1.6 trillion today," says Flores Wilson of Planning to Wealth. "With parents and students taking on higher and higher debt balances, life goals like buying a home and retirement are pushed further back."

Companies have largely shifted the burden of investing and saving for retirement from defined-benefit pension plans, which guarantee a certain level of income, to defined-contribution plans, which make employees responsible for funding retirement. In 1998, 59% of current Fortune 500 companies offered a defined-benefit plan to new hires; by 2017, that number had plummeted to 16%, according to a study by the Willis Towers Watson. Instead of being able to rely on a stable source of income during their golden years, most people working outside the public sector are responsible for their own retirement savings.

The challenges associated with employees now being responsible for funding their own retirement are compounded by a lack of investing education. "The vast majority of employees haven't been properly educated on how to invest and save for themselves through their 401(k) and other non-pension company retirement plans and now face an uphill climb to retirement," says Flores Wilson of Planning to Wealth.

The buying power of Americans' Social Security benefits has been declining significantly over the past two decades, says Brian Davis, co-founder of Spark Rental, a site focused on financial independence. In fact, Social Security beneficiaries have lost 33% of their buying power since 2000, according to the 2019 Social Security Loss of Buying Power Study conducted by The Senior Citizens League. "As Social Security marches closer toward insolvency, they've slimmed their cost-of-living adjustments (COLAs) considerably," says Davis.

Related: No Pension. No 401(k). How to Get by on Social Security

Gig economy jobs may be great as a source of back-up or additional income, helping people do everything from making ends meet on a daily basis to paying down debt. However, one of the drawbacks of such jobs is that they don't offer retirement any benefits, says Brian Davis of Spark Rental.

Conventional wisdom has been that as one ages, it's a good idea to reduce investment risks associated with one's retirement portfolio. Often this is done by shifting from stocks to bonds, says Robert Johnson, professor of finance at Heider College of Business, Creighton University. "However, the low bond yield environment that has existed since the financial crisis has made it more difficult for investors to provide for their retirements by investing in bonds," says Johnson, who adds that the current 30-year and 10-year bond yields are a paltry 2.5% and 2.0%, respectively. "It's difficult to accumulate funds for retirement by investing in bonds with such low returns."

While the overall rate of divorce in the United States has declined over the past 20 years, it's on the rise among the 50-plus demographic. "Getting divorced after age 50 or 60 has a significant impact on the ability to retire," says Renee Senes, a certified divorce financial analyst. "Plans that were dependent on supporting one household with two social security checks, a 401(k), and perhaps a pension are decimated when people divorce later in life." Add living longer to the mix and there's simply not enough working years left to recoup the savings divided in a divorce. The result: a population that will need to work longer in order to be able to retire, Senes says.

Related: 15 Ways You Will Lose Money by Getting a Divorce

Sam Sweitzer, chartered financial analyst and founder of Atlanta-based investment consulting firm Anson Analytics, says he's witnessed a growing trend of parents still supporting their adult children. According to the Pew Research Center, 61% of American parents provided financial help to an adult child. This help ranges from providing money for education to helping with recurring expenses or funding something special. Ultimately, it's money parents are not putting toward retirement.

From Netflix to Amazon Prime, Americans have grown to love their many conveniences and memberships, says Katie Ziskind, a licensed marriage and family therapist. Ziskind suggests these expenses are adding up and eating away at our bottom line. "One reason that retirement is so hard is that now we have a ton of recurring monthly expenses through subscriptions that often push people over their budget," she says.

For many Americans, a home is their single biggest asset, and often helps secure retirement. Ryan Fitzgerald, owner of Raleigh Realty, has witnessed a growing trend of people not buying homes or waiting until after 65 to do so, which can impact one's retirement nest egg. "Not purchasing a home makes retirement far more difficult, especially when over 40% of Americans have no retirement funds at all," Fitzgerald says. "If you don't own a home, you had better have very strong retirement savings, because corporate pensions are far and few between these days." Those who wait until after 60 to purchase a home miss out on years of building equity or the possibility of paying off the mortgage by retirement.

Jaquetta Ragland, creator of the site Young and Finance, suggests skyrocketing home prices are also to blame for Americans' inability to retire. "Statistics say home prices continue to rise as supply decreases and demand increases," she says. "Although a retiree can sell their home and make a profit, they will likely have to put that money into a new home. Unfortunately, the new home will take a large chunk of their profit."

In many other parts of the world, it's common to live in a budget-friendly apartment. But in this country, big houses are part of the American dream. However, that often amounts to buying too much house — and far more than the owner can truly afford.

Health care costs are another major reason why retiring is harder now than it used to be, says Danielle Roberts of Boomer Benefits. "As Americans become more aware of the reality of what healthcare will cost in retirement — many people are terrified to retire at 65 because they simply don't have the means to do so," she says. "As of 2019, Fidelity Investments reported that the average couple retiring at 65 will need to have $285,000 saved for healthcare expenses alone. We often find that many baby boomers planning to retire have to change their plans due to the fact they didn't save for the cost of healthcare." Ironically, moving abroad may mean better health care for less.

Long-term care is an expense not typically factored into healthcare costs. Yet it's another rapidly increasing line item associated with retirement, especially now as people are living longer. And as this potential cost increases, it makes it harder for people to retire. In fact, in 2018 the annual cost of an assisted living facility was about $4,000 per month, while the cost of a private room in a nursing home was about $8,365 per month, according to the Genworth Cost of Care Survey.

Another factor keeping people in the workforce is insufficient funds to maintain their current lifestyle and financial responsibilities, says relationship author Kevin Darné. "They may have extended family who financially depend on them, or some seniors have adult children and grandchildren living with them," he says. Still other people insist on having massive homes, expensive cars, and constantly updated electronic gadgets, say other experts.

An average salary today has a significantly reduced purchasing power than previous generations, says Veronica Hanson, creator of Vacay Visionary, a site focused on budgeting and passive income. According to data from the Pew Research Center, today's real average wage (that is, after accounting for inflation) has about the same purchasing power as it did 40 years ago. Wage gains have mostly flowed to the highest-paid tier of workers. So while Americans' paychecks are bigger than 40 years ago, their purchasing power has barely budged, making saving for retirement is that much harder.

In addition to increases in education costs, healthcare costs, and housing costs, other daily expenses have increased as well, says Veronica Hanson of Vacay Visionary. "Costs that have debilitated the current generation include technology and communication and childcare. Increases in housing costs, food, and transportation haven't helped either," she says. "Most employers used to provide healthcare at no cost to the employee. Now families are being left without enough disposable income to survive after healthcare costs are removed from their paychecks. Previous generations didn't have to purchase a $1,000 cellphone, a $2,000 laptop, or pay a $100 cellphone bill as well as a $75 internet bill and an additional $6 for data storage. The list goes on and on."

With all the expenses associated with simply living, funding one's retirement often gets put on the back burner. "When you consider that most people start contributing to their accounts far later than they should, it makes retirement planning more difficult," says Jared Weitz, CEO and founder of United Capital Source, Inc. "People are having to work longer and save much more money later than they would have if they had begun the savings at a young age."

Many Americans stick with what they know, and that's often big, American stocks. This means they miss out on rallies in stocks and bonds from other parts of the world that could help grow retirement funds more quickly.

Debt is another reason it's more difficult to save for retirement than it was in previous years. In addition to student loan debt, credit card debt is higher than at any time in history. According to the Federal Reserve, debt totals reached $4 trillion in April 2019. Many financial advisers advocate paying down debt before you start to put money away for retirement.

Individuals born between 1957 and 1964 worked, on average, between 11 and 12 jobs between the ages of 18 and 50, says Logan Allec, a certified public accountant and founder of Money Done Right. All that moving around can put a ding in retirement planning. "Job changes can affect retirement eligibility as well as account contributions," Allec says.

For decades, Americans did not have to worry about accumulating their own retirement savings, says Robert Johnson of Heider College of Business at Creighton University. "Over the past few decades there has been a shift from defined benefit to defined contribution pension plans. In the defined benefit world, one didn't need to be concerned with saving for retirement," he says. "The Baby Boomers retiring today began their careers in the defined benefit world. They didn't witness their parents saving for retirement and weren't conditioned to do so themselves. People approaching retirement and those currently retired, weren't conditioned for the current do-it-yourself retirement planning world."

Countless Americans simply don't know how much money they may need for retirement, or even know how to figure it out, says Drew Parker, founder of The Complete Retirement Planner. "Planning for retirement has been reduced to guessing, hoping, and sorting through half-truths and misguided assumptions. People need and deserve better guidance and better planning tools to help them navigate this complex and important process."