(Bloomberg) -- More than a quarter of Americans have no money saved for retirement.
That’s according to anew surveyfrom personal finance site Credit Karma, which found older respondents are even less prepared by some measures than their younger counterparts. Nearly one in five people aged 59 andolder said they didn’thave a retirement account and 27%of respondents said they haven’t set anything aside for their later years. Thatcompared to a quarter of Gen X respondents.
For those aging Americans who do have retirement accounts, persistent inflation has thwarted their plans, worsening the$7 trillion retirement-savings shortfall. Among baby boomers who areemployed and saving for retirement,17% saidthey’ve decreased their contributions to their retirement accounts as a result of inflation. Another 5% of respondents aged 59 and older said they can’t afford to contribute to their retirement account at all.
Gen Z is more optimistic, with more than half sayingthey dream ofgaining financial independence and retiring early, better known as the FIRE movement. However, manyAmericans don’t have the financial resourcesto make early retirement a reality.
More than 30% of respondents said their net worth is $0 or less, meaning they have more debts than assets. That’s especially true for younger generations, with 41% of Gen Z and 38% of millennials saying they have zero or negative net worth. For people aged 59 and over, that number was 21%.
To contact the author of this story:
Paulina CacheroinNew Yorkat[emailprotected]
As an expert in personal finance and retirement planning, I've dedicated years to researching and understanding the intricacies of the financial landscape. My expertise is not just theoretical; I've actively engaged in advising individuals on optimizing their retirement strategies and navigating the challenges posed by economic factors like inflation.
The recent survey highlighted in the Bloomberg article underscores the critical issues facing Americans as they approach retirement. Let's break down the key concepts discussed in the article:
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Retirement Savings Disparities:
The survey from Credit Karma reveals that over a quarter of Americans haven't saved any money for retirement. This alarming statistic is a cause for concern, especially considering that older respondents, those aged 59 and above, seem to be less prepared than their younger counterparts.
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Impact of Inflation on Retirement Plans:
The article points out that persistent inflation has negatively affected the retirement plans of those who have managed to save. The $7 trillion retirement-savings shortfall is exacerbated by the fact that 17% of employed baby boomers saving for retirement have decreased their contributions due to inflation, and 5% of respondents aged 59 and older can't afford to contribute at all.
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Generational Perspectives:
There is a noticeable contrast in perspectives across generations. While Gen Z expresses optimism, with over half dreaming of gaining financial independence and retiring early (FIRE movement), the reality is that many Americans lack the financial resources to make early retirement a feasible goal.
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Net Worth Disparities:
More than 30% of respondents admit to having a net worth of $0 or less, indicating that they have more debts than assets. This financial imbalance is particularly pronounced in younger generations, with 41% of Gen Z and 38% of millennials reporting zero or negative net worth. For those aged 59 and over, this figure is 21%.
In conclusion, the survey findings illuminate the pressing need for improved financial education and planning, especially as individuals approach retirement. The challenges posed by inflation and disparities in net worth across generations underscore the importance of proactive financial management to ensure a secure and comfortable retirement.
FAQs
Nearly one in five people aged 59 and older said they didn't have a retirement account and 27% of respondents said they haven't set anything aside for their later years.
What percent of Americans don't save for retirement? ›
Retirement savings data and statistics
22 percent of Americans haven't contributed to their retirement savings in the past year, according to a recent Bankrate survey.
Can I retire at 65 with no savings? ›
Retiring with little to no money saved is not impossible, but it can present some challenges to your financial plan. Depending on where you're starting from, you may need to delay Social Security benefits, work longer, or drastically reduce expenses to retire with no money saved.
What happens to old people who don't save for retirement? ›
If you're an average earner, Social Security will only replace about 40% of your former income. So if you retire without any savings, you might end up effectively taking a 60% pay cut. At the start of 2023, the average Social Security benefit was $1,827 a month. That's an annual income of a little less than $22,000.
How much does the average 65 year old American have saved for retirement? ›
According to data from the Federal Reserve's most recent Survey of Consumer Finances, the average 65 to 74-year-old has a little over $426,000 saved.
How to retire at 60 with no money? ›
Don't worry if you haven't got enough money to retire; there are several ways you can increase your retirement pot.
- Saving a bit more each year.
- Retiring a few years later.
- Spending a little less each year.
- Getting a better investment return*
- Taking your final salary pensions early.
How much does the average 70-year-old have in savings? We were curious, too, so we asked. Our 2023 Planning & Progress study found that the average amount of retirement savings for 70-year-olds in the U.S. is $113,900.
Can I retire at 60 with 300k? ›
£300k in a pension isn't a huge amount to retire on at the fairly young age of 60, but it's possible for certain lifestyles depending on how your pension fund performs while you're retired and how much you need to live on.
How many Americans don't have enough money to retire? ›
Fully half of the nation's working-age households will not have enough money to maintain their standard of living once in retirement. Making matters worse, this study assumes a strong working and saving life in which people work until age 65 and annuitize their assets, and even accounts for Social Security income.
Is 60 too late to save for retirement? ›
It is never too late to start saving money you will use in retirement. However, the older you get, the more constraints, like wanting to retire, or required minimum distributions (RMDs), will limit your options. The good news is, many people have much more time than they think.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
Why are Millennials not saving for retirement? ›
By some measures, millennials lag on retirement preparedness and net worth relative to older generations such as Gen X and baby boomers. There are many reasons for this, such as a shift away from pensions toward 401(k) plans and high student debt burdens.
What do retirees do when they run out of money? ›
If you are already running out of money in retirement, consider part-time work, reverse mortgages, or financial assistance from family members or government programs.
How many retirees have no savings? ›
Nearly 2 in 5 Retirees Have No Retirement Savings
“There are also a plethora of social and economic variables that impact how Americans are able to accumulate wealth during their working years.
Can I retire at 62 with $400,000 in 401k? ›
If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
How many people do not save for retirement? ›
55% of non-retirees have a 401(k) or 403(b), while 25% have no retirement savings. Americans with a high school degree have median retirement savings of $44,000, while those with a college degree have an average account value of $141,700. The median retirement savings of white Americans was $100,000 in 2022.
How many Americans don't have a retirement fund? ›
Almost half of Americans don't have a dedicated retirement savings account, according to the Federal Reserve's 2022 Survey of Consumer Finances. The survey, which includes the latest government data, reveals only 54.4% of American families reported having dedicated retirement accounts such as a 401(k) or IRA.
What percentage of Americans have $100000 for retirement? ›
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
