We’ve heard for quite some time that an increasing (and alarming) number of Americans are not saving for retirement. Even after the recession, analysts are concerned that the priority still hasn’t really shifted when it comes to preparing for the future. Now, though, a new study reveals a different picture – and one that’s causing even more alarm.
This new survey “Preparing for Retirement in America,” from the Employee Benefit Research Institute (EBRI) and Greenwald and Associates, reveals that only 65 percent of American workers have any retirement savings, a number significantly lower than the 75 percent figure from 2009. And one third of those who DO have savings, have less than $1,000.
Further, a whopping 34 percent say they have made no effort at all to saving anything or make a retirement plan . Still, most say that they intend to start saving at some point.
While the 75 percent number reported in 2009 is directly related to the recession that had begun to dig in for a long stay, the fact that today’s number, post recession, is what has many alarmed.
There’s another finding in the study, too.
Those households that have employer backed plans, a full 90 percent of workers take advantage of them. This means that employer based retirement plans are serving their purpose, the problem is employees aren’t making the most of the employer maximums since so many have less than $1,000.
Of those families where both spouses employer’s offer plans, only 61 percent say both partners are contributing to their respective plans.
Of those who are saving more, they say they could further up their contributions by eliminating soft drinks and snacks from vending machines, foregoing the weekend movie or on demand movie, abandon their specialty coffee stop each morning and commit to leaving the lottery tickets behind. This sounds simple enough, yet the numbers suggest this simply isn’t happening.
While most 40 somethings say they’ve always been told they need to save $1 million to retire comfortably; today, analysts are saying that a 20-year-old in 2015 may have to amass up to $7 million to retire comfortably. Those who retire this year, at the age of 65 and with $1 million, can safely withdraw $43,600 a year. Today’s 20-year-olds will need hit the magic $7 million number to have that same lifestyle when they retire.
Many Americans save for retirement using the 401K plans provided through their employer, but according to the federal government, around 50 million Americans don’t have the ability to enroll in such a savings plan. Further, those numbers may increase as well because so many employers require full time employment before retirement is offered. As we’ve seen over the past few years, those same employers are bringing their employees to part time status in order to offset the costs of the Affordable Care Act.
The good news is it’s never too late to start a retirement plan. Of course, the older we are, the more aggressive our efforts should be; however, with some discipline, we can ease those burdens that are likely keeping many Americans awake at night.
To learn how ensure your loved ones inherit your assets with as few taxes as possible or to learn more about creating an estate plan, contact DeBruyckere Law Offices today.