Long contending with the ‘ole “Keeping Up with the Joneses” mentality, only 64% of American workers have saved for retirement according to the Employee Benefit Research Institute’s annual Retirement Confidence Survey. Even worse, only 57% of workers are currently saving for their Golden Years, down from about 65% in 2009.
More than two-thirds of households with total annual income of less than $35,000 have less than $1,000 saved. For households making at least $75,000 a year, 97% have saved at least $1,000 for retirement. Shockingly, if you exclude home equity values and pension plans, more than a third of all workers have less than $1,000 in total savings and investments, and—almost a scarier fact—60% of workers have less than $25,000 saved up.
The survey showed young workers have struggled too. Of those aged 25-34, more than 80% have less than $25,000, and 95% have less than $100,000. Only a quarter contribute to a workplace retirement savings plan, down from 35% last year.
For those who are within 10 years of the theoretical retirement age, 50% have less than $50,000 saved, and about 60% have less than $100,000 saved. Less than 45% contribute to a workplace retirement savings plan.
Overall, less than half of all workers have even tried to calculate how much they’ll need for retirement. If you try to do it by yourself, you need to make several assumptions like your expected growth in spending and income, your expected return on savings during your working years and during retirement, your life expectancy. Somehow, 30% of all workers still believe they can make it through retirement on less than $250,000 in savings. About half believe they can make it on less than $500,000. This may be a problem for the 50% of workers ages 55 and older who have saved less than $50,000 and the 66% of workers in the 45-55 age range with less than $50,000. Less than a quarter of workers 55 and older have more than $250,000 in savings and just about a tenth of all workers have achieved this level of savings.
Retirement Expectations and Changing Attitudes about Social Security and Medicare
The economic struggles of the last seven years have certainly made workers rethink the age at which they might retire. In 2006-07, about 5% of workers expected to retire later than originally planned. Today, it’s about three times that. More than 40% of workers plan to retire after 65, including 10% who don’t plan to retire at all. About two out of three workers expect to work, at least part-time, after they retire.
Overall Retirement Confidence
Given what we’ve gone through over the past seven years, it’s really not all that surprising that there’s been a large jump in Americans who are not confident they have enough money saved for retirement. In 2007, about 29% of workers were not confident, but today, that figure is closer to 45% of all workers. In the same vein, over that period, the percentage of Americans who were “very” confident they had save enough slid from 27% to about 18%.
There is a lot of fear today and the markets are at all-time highs, but think back to March 2009, some individuals became victims of their own fears because many of them sold their stocks at the bottom. Of those already retired, the 2007-09 market downturn really did a number on their confidence. In 2007, when markets were peaking and home values still holding up, 41% of retirees were “very” confident they had enough money. Today, that figure stands at 28%. However, that’s sharply higher from last year’s 18% reading
At Henssler Financial we believe you should Live Ready, and that includes having confidence in your retirement plan. If you have questions regarding your retirement savings, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
