The reasons for such a huge shortfall between the two numbers is easy to see when looking at the numbers. Just over one-third (34%) of middle class adults who work aren’t contributing a single cent to their 401(k), IRA or some other type of retirement savings account. Those who are managing to save money for retirement are only saving a median amount of $125 a month. Almost one-in-five (19%) have no retirement savings at all.
The majority of the people questioned don’t feel a need to sacrifice for their retirement savings. Just under two-thirds (61%) responded they aren’t sacrificing much to save for retirement while just over one-third (38%) responded that they are making sacrifices to save money for retirement. Just over half (55%) responded they plan to save more money later to make up for not saving as much as they should be saving now.
The lack of savings is putting many in a position where they aren’t sure whether they will be able to retire. Almost one-third (31%) of middle class adults don’t believe they’ll have enough money in retirement to survive. For middle class adults in their 50’s, half say they will continue to work until they’re 80 years old because they don’t have enough money saved to retire.
One of the main findings of the survey is that investment returns alone aren’t going to produce enough income to create a secure retirement account. It’s essential for people to save money in addition to investing it, and that’s something many in the middle class in the US aren’t currently doing. As Wells Fargo’s director of institutional retirement, Joe Ready, points out, “The main message here is people are putting off saving, and they are losing the benefit of long-term compounded earnings. Kicking the empty can down the road is going to be detrimental to their retirement security. It’s really a problem.”
There are five things people should do to improve their retirement savings:
- Start saving today
- Take advantage of your company’s 401(k) match, if offered
- Figure out how to save more than you currently are saving
- Determine the type of investor you are
- Leave your hands off your savings
The survey questioned 1,001 adults between the ages of 25 to 75 who had a median household income of $63,000.
(Photo courtesy of Garry Knight)
The problem is people always think they’ll have time later to save money, and that time will never come. Start now, even if it’s just a little. Get into the habit. The longer you wait, the harder it’s going to be to save what you need.
I’m one of those people who is going to have to work until I’m 80 🙁
My Uncle is a RELATOR at 87 and he stays alive by going into his office everyday at 9AM. My Father-N-Law was an electrician at Chrysler and was given a pension after 39 years working there.
He died just ten years after retiring as he did not stay active.
One way to save money is to just not spend it in the first place.
Americans fill up their garage with “stuff” and then can’t park their car. Technology is not for technology’s sake. The new “home automation” technology fad is a hacker waiting to happen. Does my refrigerator really need to communicate with my thermostat? I think not. Technology is about RETURN-ON-INVESTMENT.
I’ve been saving for a long time, but in the last recession, lost a substantial amount in my 401K when the markets crashed. And more than likely something similar will happen again before I retire. Investing in anything tied to the markets is a gamble, but you don’t really have much of choice. Savings accounts are good, but there is virtually no return on them. People who think they will be working in their 70s and 80s need to think again. Who do think is going to hire a 70+ year old? Once you hit 50 something, good luck finding a job if you are out of work.
I’ve been saving since age 22 (30 yr ago) and I’ll STILL have to work till I’m 80!
Fair wages that allow us to meet basic needs and have a bit left over would go a long way to help save for retirement. It is a monthly scramble to make ends meet which is why my family (and probably many others) are not saving enough.
if the prices of basics, gas, food, housing is going up and you are doing fair, extra amounts of money goes to those basics today not tomorrow.
While I am saving through work, there is little to no matching, pension nope. Little tiny raises and I am not even making a survival rate of pay in my state.
It will be interesting for so many of us.
I’m 22 and have fully invested in an IRA since I turned 18. I also invest 1000/ month in a separate investment account and intend on retiring happily with roughly 4-6 million. It’s about accepting less to have what you want later in life.
Oh I also make $36,000/ year gross.