What does the state of retirement savings look like in America? We’ve compiled a few statistics from recent studies that may surprise you a bit:
- Approximately one-third of Americans have no retirement savings. This is in spite of many employers offering 401(k) plans — some studies say almost 80 percent of all full-time employees have access to some sort of employer-sponsored retirement plan. A report from the Federal Reserve indicates 31 percent of all non-retired respondents said they have no pension or retirement savings, including 19 percent of people who are close to retirement age.
- Many Americans are relying solely on Social Security. A Gallup study asked Americans what their retirement plans are, and about 89 percent of all people who have 401(k)s do plan to use them. However, about 35 percent of Americans older than 65 rely entirely on Social Security to be their primary source of income, and about two-thirds of people who start working at age 25 will end up being financially dependent on friends, family or Social Security.
- More than 20 percent of Americans tap into 401(k) funds before retirement. Nine percent have engaged in early withdrawals, while 16 percent have taken out a loan from their 401(k) accounts. This is a big problem, as it could lead to these people not having the money they need for retirement.
- Young people have too many financial responsibilities to begin saving early. Millennials are so saddled by student loan debt that they often can’t afford to begin saving for retirement until they’re in their early 30s or later, by which time they’re more likely to have children and families, which can make it harder to get started with retirement savings.
- The Recession still plays a role in retirement planning. More than 60 percent of people in a Statista study said they had to delay their retirement because of money lost in the 2008 Recession. While America has recovered fairly well since then, many retirement plans have yet to hit the same highs they did before the Recession hit.
To engage in smarter, more effective retirement planning, contact the experts at Money Mastery for assistance.