Evidence presents a discouraging case against a financially secure retirement for thousands of Lackawanna County residents.
An analysis by Decision Data Resources, a business intelligence firm in Birmingham, Ala., concluded that average household expenditures in the county outstripped income by 15 percent in 2010.
"People in this area are spending more money than they earn," said Teri Ooms, director of the Institute for Public Policy and Economic Development, a regional think tank that cited the data in its 2011 analysis of the region's economy. "We are deficit savers."
Other statistics point toward a budgetary pinch for many county residents approaching the conclusion of their working years:
- Median household income, at $45,185, is 12.5 percent less than the state average, according to the Census Bureau.
- Investment firm A.G. Edwards ranked the region 455 out of 500 U.S. metro areas in personal savings rates in 2008.
- Mean Social Security income of $15,837 is 7 percent less than the state average, and mean retirement income of $16,196 is 16 percent below the state average, census data show.
- A historically severe recession cut average U.S. family net worth by 40 percent from 2007 to 2010, according to the Federal Reserve.
The prospects frighten many people who may face financial uncertainty in the senior stage of their lives.
"People are getting to the point where they are nearing retirement and they are so scared of what they might find out, they just ignore it," said Lynn Evans, president of Northeastern Financial Consultants Inc., Clarks Summit. "They don't want to find out."
The route to a more-financially sound retirement, for many, probably is putting in more time on the job.
"It's so much easier to work a couple extra years now than to find out in your 70s that you don't have enough money and try to re-enter the workforce," said Jack Vanderhei, an executive at the Employee Benefits Research Institute, a Washington, D.C., nonprofit that analyzes retirement and economic security issues.
"Working longer does a lot of good things," said Anthony Webb., Ph.D., an economist at the Center for Retirement Research at Boston College. "It gives you more years to contribute to your 401(k) and it increases your Social Security benefits."
People who begin collecting Social Security at age 62 get just 73 percent of what they would receive at full retirement age.
"For people who retire at 62, virtually nobody can maintain their pre-retirement standard of living," Dr. Webb said. "If people retire at 70, most of them can."
But as the nation transitioned over the last generation from defined-benefit pension plans to mostly defined-contribution models, many people never saved adequately.
The average U.S. household headed by people in the 55 to 64 age group has an IRA or 401(k) valued at about $120,000, Dr. Webb said.
"That's not going to get them to the lifestyle they dreamed about," he said.
Many middle- and upper-income people face the prospect of living on 40 to 45 percent of preretirement income, Ms. Evans said.
"It's a huge haircut when you retire," she said. "For them, the picture is not pretty."
Experts caution against planning to rely on Social Security as a sole source of retirement income.
"Social Security is a very modest program. It was never meant to be the pension system for people," said Mark Price, an economist at the Keystone Research Center, a progressive think tank in Harrisburg.
"Unfortunately for many people, there has been no retirement planning," Mr. Vanderhei said. "It's going to be more difficult to have a decent standard of living if you plan just to live off Social Security."
The region has a high proportion of impoverished seniors who continue to fall further behind financially as their living expenses rise, Ms. Ooms said.
"We see more people at the low end and they tend to use more public services and systems," she said. "There is a strain on a variety of sectors. It makes it more difficult for local organizations to provide services to meet the demand."
For people approaching retirement age who invest in a retirement account, Ms. Evans said, the prospects could be better than they anticipate.
"People have to get themselves outside the story that you have to have this big, achievable number," she said. "You cannot plan on this with a straight line. You have to give yourself a range to work with. An absolute number is crazy."
Contact the writer: jhaggerty@timesshamrock.com