The cost of pensions and medical care for retired people is rising sharply in the United States and in some other nations where the elderly are a growing percentage of the population. As governments and companies seek ways to cut costs, some Americans worry they will not have enough money to live comfortably when they are too old to work.
Most American retirees get payments from Social Security, a government program that is a key source of income for people over 65. But rising costs are prompting Congress to consider lower benefits, higher taxes or a later retirement age.
Juan Sandy thinks future retirees will have to get by with less. "I worry for my daughter and granddaughters because I feel the future is more complicated for the younger than for us today," Sandy said.
The financial concerns about Social Security grow out of a big wave of retirements by Baby Boomers, the huge generation born after World War Two, which grew up in the 1950s and 60s..
The problem is that after the Boomers paid a lifetime of taxes to support previous retirees, there are now fewer working Americans to fund the same level of benefits for the Boomers.
There are now three active workers paying taxes to support each Social Security recipient. By 2030, there will be just two workers per retiree.
Jean Setzfand, a top official of the American Association of Retired Persons, says Social Security is so critical to so many people that changes must be made with care.
"Everything else is essentially eroded to the point where there is nothing left, or there is barely enough left. So if the government is not there to support a system like Social Security, God knows what is going to happen to retirees," Setzfand said.
To suplement Social Security only a shrinking minority of employers pay pensions to employees.
Instead, many offer a savings program called a 401-K. Workers put some of their salary into an account that is sheltered from some taxes and pays out after retirement.
Employers say 401-K plans are less expensive than traditional pensions. Companies encourage workers to participate by making contributions that match some of the money set aside by employees.
To help savings grow, workers like Frank Giove, can invest them in many ways, including the stock market, which carrys some risk. "I trusted the advice I was getting, and then again there was another major downturn and I ended up pretty much losing it all. So it has been a very bad experience to be in the stock market," Giove said.
Giove is not alone. New surveys in the United States and other nations show many people know little about managing investments.
Annamaria Lusardi of the George Washington University School of Business worked on two of those studies.
"I feel there is a problem putting so much responsibility on the shoulders of workers in making sure they are saving enough for retirement at the same time not equipping them with the knowledge and tools needed to make those retirement decisions," Lusardi said.
Lusardi says if retirees like those in this writing class in Maryland are going to make savings plans work, they need to understand financial concepts like interest compounding, inflation and risk diversification. "It seems like it’s good that we live longer, but of course, what do you do with yourself for the last 30 years?," Greene said.
Class member Ray Greene says managing retirement money effectively is more important than ever because better medical care is helping people live longer, and those extra years raise the cost of retirement.