Think twice before cashing that birthday check grandma sent you.

‘Willy Wonka and the Chocolate Factory’

I’m no Warren Buffet. Most of my financial savvy comes in the form of frantically moving money from checking to savings as soon as I get my weekly direct deposit, then moving some of it back again five days later when I run out of cash and want to get sushi for lunch, then prepaying half of my cable bill so I feel less guilty about going out for martinis on a Tuesday night.

But as my mother says: Do as I say, not as I do. As it turns out, there are compelling—and alarming—reasons for me to heed that advice.

The retirement crisis

A recent survey by GoBanking uncovered some unsettling information about the financial portrait of an average American. (Just writing this article makes me feel a little queasy about my own spending habits. But hey: You only YOLO once.) The results? Roughly 70% of the country has less than $1,000 in savings.

Even more frightening? About half of that 70% is a chunk of folks who have zippo in savings. Like I said, I’m not here to throw stones. I just think we’ve got to start looking at the numbers and wondering: Can Granny really afford those birthday checks she keeps cutting me?

Old folks going broke

GoBanking

What does the current landscape look like for retirees? According to the Supplemental Poverty Measure Research, 16% of seniors live below the national poverty line. That’s higher than the national proportion of non-seniors below the line, and according to Katie Read of Star Tribune, that number will only get worse.

“As 76 million baby boomers head into retirement, well over half, according to some estimates, don’t have enough money to last throughout their old age. The nation is hurtling toward a retirement financial crisis. The National Institute on Retirement Security (NIRS) calculates that two-thirds of households age 55–64 have savings equal to less than their annual income. A third have no savings at all.”

It’s one thing to be in your early- to mid-20s and have meager savings. It’s another to be hurtling toward the average age of retirement and have nary a penny to show for your decades of work. Part of the reason nobody seems to be taking this very seriously yet is that the current generation of retirees are still doing pretty well.

Holding steady—for now

Katie Read points to the fact that most baby boomers?—?whose impending retirement will visit financial chaos upon us?—?aren’t overly concerned because their parents are just fine. “Many boomers have watched their mothers and fathers retire comfortably,” writes Read. “Retirees in their late 60s and early 70s?—?older boomers and people born during World War II?—?are, as a group, in notably good shape financially.”

Why them, but not the boomers? It all comes down to a paradigm shift that moved retirement funds from defined-benefit plans (like pensions) to defined-contribution plans (401Ks, IRAs). Whereas the former doles out monthly payments, much like a salary might, the latter gives you a lump sum and trusts you not to blow it all very quickly.

So right now, the millions who don’t have fat pensions coming their way are simply less frightened than they should be because their predecessors are sitting pretty. What has been, will be, goes the common wisdom—except this time, probably not.

Are we too scared?

Some sources, like Tom Sightings’ article for US News and World Report, claim that the “retirement crisis” is an overblown, scary specter that obscures the real landscape. Sightings tries to debunk some of the main crises facing our retirees, including the depleted Social Security fund, the stats about retiree savings and the concerns about drastic reduction in standards of living.

His arguments?

  • Just because people aren’t saving now doesn’t mean they don’t have decades ahead of them to save.
  • Most retirees have some assets beyond savings.
  • Even if Social Security doesn’t get its act together by a 2035 deadline, it’ll cut benefits by “only” 23%. (Sightings declares this while simultaneously admitting that the current average monthly income on SS is $1,350 per month, a pretty paltry sum.)

In some ways, I want to side with Sightings. Who benefits from the sky-is-falling fear-mongering, right?

Well, sure, it might be true that people about to retire have assets like houses and property to parlay into income. It might be true that the Social Security net is there to help out people retiring in the next 20 years. But don’t forget about the younger generation he waves off by saying, “Most people with no savings are young workers who have many years ahead to plan for retirement, and they might be able to save later in their career.”

The forecast for young folks? Grim

Sure, we have “many years” to plan for retirement. But the “might” in “might be able to save” is a big “might,” Tom. After all, we’re dealing with unprecedented financial burdens.

While our parents and grandparents all own houses, it’s not so easy for us. After all, the median rise in housing costs since 2005 is around 20%. We’re having a hard enough time paying the rent, never mind committing to a 30-year mortgage. (Especially not when regular career changes can send us to different corners of the country or globe.)

Then, of course, there’s the looming boogeyman of student debt. What other generation was so hindered by the massive debt education has inflicted on Gen-Xers and millennials?

I can’t hope to offer some fiscal panacea for retirees. I’ll leave that to the economists. But a good first step toward addressing the problem is to at least acknowledge it’s there?—?after all, financing your twilight years isn’t as easy as shifting some money between accounts for a 10-piece sushi lunch.