The biggest difference between yesterday’s retiree vs. today’s is the diminished defined benefit — or pension — plan replaced by defined contribution plans with ERISA of 1974(opens in new tab) establishing the IRA and the Revenue Act of 1978(opens in new tab) creating the 401(k). Studies have shown that pensions are and have been rapidly replaced.
As retirees underestimate their longevity, as well as stock market volatility, the probability that they’ll outlast their savings will keep dropping. Proper adjustments need to be made now before irreparable damage is made.