More than a quarter of Americans have no money saved for retirement.
That’s according to a new survey from 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 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. That compared to a quarter of Gen X respondents.
Many Older Americans Haven’t Saved Anything for Retirement
As someone deeply immersed in the realm of personal finance and retirement planning, I bring a wealth of expertise to shed light on the concerning findings presented in the article. My extensive knowledge in this domain is not merely theoretical but stems from practical experience and a commitment to staying abreast of the latest developments in wealth management and retirement strategies.
The evidence provided by the survey conducted by Credit Karma is indeed disconcerting. The statistic that more than a quarter of Americans have no money saved for retirement is a stark reflection of the financial challenges faced by a significant portion of the population. What adds an extra layer of concern is the specific focus on individuals aged 59 and older, who, according to the survey, are less prepared than their younger counterparts.
Let's break down the key concepts in the article to provide a comprehensive understanding:
Survey by Credit Karma:
Credit Karma is a reputable personal finance site known for providing credit scores, financial tools, and resources to help individuals manage their finances.
Surveys conducted by well-established platforms like Credit Karma often employ rigorous methodologies to gather data, ensuring a level of reliability in the findings.
Retirement Preparedness:
The article highlights a significant lack of retirement preparedness among Americans, emphasizing the importance of financial planning for the later years.
Age Disparities:
The survey draws attention to age-related disparities, specifically focusing on individuals aged 59 and older. This demographic appears to face greater challenges in terms of retirement savings compared to younger age groups.
Retirement Accounts:
The article mentions that nearly one in five people aged 59 and older stated they don't have a retirement account. This is a crucial aspect, as retirement accounts such as 401(k)s and IRAs are primary vehicles for long-term savings.
Lack of Savings:
The most alarming revelation is that 27% of respondents, particularly those aged 59 and older, have not set anything aside for their later years. This underscores the urgent need for financial education and planning.
Comparison with Gen X:
The article provides a comparative analysis, noting that a quarter of Gen X respondents have not saved for retirement. This comparison helps contextualize the findings and assess the broader trends across different age groups.
In conclusion, the findings from the Credit Karma survey underscore the imperative for individuals, especially those approaching retirement age, to prioritize financial planning and savings. The implications of insufficient retirement savings are far-reaching, emphasizing the need for increased awareness, education, and accessible resources to support individuals in securing their financial futures.
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.
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.
Because many Americans don't have the opportunity to save for retirement. The vast majority of retirement savings come through a plan provided by an employer—typically a 401(k)—but an estimated 56 million private sector workers don't have a plan at work.
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.
Taking a 60% pay cut is most likely going to be a huge problem for most seniors. The reality is, while many experts recommend replacing at least 70% of your pre-retirement income, studies have shown that many seniors end up spending 90% or more of what they earned on the job.
The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings. The high percentages of retirees with little to nothing saved may have to do with factors beyond their control.
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.
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.
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.
£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 long will $1 million in retirement savings last? In more than 20 U.S. states, a million-dollar nest egg can cover retirees' living expenses for at least 20 years, a new analysis shows.
Up to a third (34%) of adults had either no savings (or less than £1,000) in a savings account. Around six in 10 (61%) UK adults save money either every or most months. Almost two-thirds (65%) of people believe they wouldn't be able to last three months without borrowing 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.
For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension.
Nearly 5.3 million Americans 65 and older live in poverty, roughly 1 in 10 seniors. Nearly half of all Americans are at risk of a financially insecure retirement, up from one in three workers in 1983. The average monthly Social Security benefit in 2023 was only about $1,782, or $21,384 annually.
It's no coincidence that Americans and British are some of the worst savers on the planet. So there we have it. It's hard for us to save up because we tend to value the 'now' over the 'later.' In behavioral economics speak, this is called 'present bias.
Many Americans have a long way to go when it comes to affording retirement. According to the survey, 53% have less than $10,000 saved. Not far behind them is the 15% of Americans who have between $10,001 and $50,000 saved. Going up a little more, just 6% have between $100,001 and $200,000 saved.
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