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We Are Not Saving Enough For Retirement

Study shows few of us are prepared for emergencies, let alone retirement.A new study out of the National Bureau of Economic Research shows what a train wreck do-it-yourself retirement is going to be.

Its survey of 1,500 Americans conducted during the summer of 2009 shows that many of us aren’t even saving for everyday emergencies, much less retirement.

Most of us have not even thought about how much money we’ll need to retire comfortably and many of us who have retirement plans have almost no knowledge or understanding about how it’s invested.

Among the scary facts from the survey:

  • 30% of all Americans have no savings at all.
  • Half don’t have enough savings to cover three months of living expenses if they are laid off or can’t work because they’re sick or injured.
  • Only 42% of those surveyed said they have even tried to figure out how much to save for retirement.
  • That figure rises to just 51% for those who are 45 to 59 years old and closest to retirement.
  • Only half of those surveyed said they even had a retirement account through an employer.
  • When those who have a retirement account were asked how much of their savings is invested in stocks, or mutual funds that include stocks, 17% didn’t know.
  • When asked if their retirement savings is primarily invested in target-date mutual funds, 37% said they didn’t know.

401(k) retirement plans were supposed to replace disappearing corporate pensions.

If we empowered Americans to plan for their own retirement, supporters claimed we’d make better choices than any employer or government bureaucrat could make for them.

They envisioned a nation of empowered investors intent on building wealth and a secure future for themselves.

But we haven’t saved nearly enough. And we haven’t been all that smart with the money we have put aside.

We have a boat load of Baby Boomers — and Gen Xers right behind them — headed for an impoverished retirement.

And the often cited solution that they’ll just continue to work?

Many workers are pushed into retirement before they’re ready because they’re laid off or they encounter health problems that makes it impossible to keep working.

A 2008 McKinsey & Co. study found that the median retirement age is 62.3 years old. That’s not even the 65 number typically thrown around as retirement age.

They are almost certainly going to be more not less dependent on government programs for the poor and the elderly than current retirees.

Yet the debate in Washington is all about cutting — or even eliminating — those programs.

Break out the Alpo, grandma! Things are going to get ugly over the next couple of decades.

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  1. Mike Sante said:
    on June 20th at 10:35 am

    A labor lawyer wrote an op-ed piece in this mornings New York Times that says: “Let’s wake up: the biggest crisis we face is that most of us have nothing meaningful saved for retirement.”

    Here’s where to find the whole thing: http://www.nytimes.com/2011/06/20/opinion/20geoghegan.html?_r=2&ref=opinion

    Regrettably he’s clearly an un-American liberal lefty who no one will listen to. But he clearly supports your train wreck idea.