If Washtenaw Community College Trustees need another reason to insist that the WCC Administration immediately refocus on creating programs that lead graduates to high-wage jobs, here it is. A new survey from the American Association of Retired Persons (AARP) shows that among adults who save for retirement, nearly two-thirds say that they either will not have enough or do not know if they will have enough saved for retirement.
According to the study, one of the challenges to saving for retirement for people over the age of 30 is rising inflation – not for its obvious and immediate impact – but rather, because it prolongs the lifespan of debt and prevents people from saving for retirement well after inflation has subsided.
Not surprisingly, low-income households and households with only one earner have a harder time saving for retirement than those living in two-income households. Low income status most often means that workers can’t save for retirement because their income is typically spoken for by ordinary household expenses and debts.
It isn’t rocket science. People need enough income to get by. When they don’t make enough to pay their current expenses, they can’t justify saving for retirement – even when they know it’s a good financial strategy.
What makes retirement saving work is time. Savers need to have enough time for their investments to produce sufficient returns to enable them to retire. Losing the opportunity to save for retirement early in their careers means that they are never likely to have sufficient resources to retire. Even if they are able to set aside a larger volume of cash as they approach retirement, they will have lost the financial and strategic benefits of long-term investing.
Not enough older workers saving for retirement
That’s why pursuing a strategy of quick, limited training to get workers into the workforce even when the job pays poorly has some long-tail consequences. These consequences affect not only the low-wage workers, but also the community around them.
Low-wage workers tend to have less and worse access to health care, which only raises the cost of healthcare to the individual and to the community. Poorer health outcomes raise the cost of healthcare without generating any long-term health benefits.
So, as a community, we end up with low-wage workers who have little to nothing saved for retirement, and they’re left to struggle with significant healthcare challenges due to long-term lack of adequate healthcare services.
Remind me: why are we so invested in preserving low-wage jobs?
Photo Credit: Fort George G. Meade Public Affairs Office , via Flickr
