CNN: "Retirement Scare"

[fe2o3ez]

So I ran to grab a glass of water from the break room at work, where they have CNN on all day. There was a headline across the bottom that said the following: Retirement Scare: 60% of workers have less than $25,000 saved.

I'm not a big one for broadcast journalism, and really dont want to debate its merits here. I am more interested in the statement.

Does it make sense to you? Do you believe that it is true? I just can't imagine that mainstream employees, old or young, would have so little set aside. That's not even an adequate EF for many.

Part of me wants to say that there is no way it can be true, but when I think logically about demographics and spending habits, I think it might be.

What do you think?

[bjl584]

I would like to see the details of the survey that they derived that information from. It may be skewed or biased in someway.

That being said, i do agree that many people are not prepared for retirement. I don't know about the 60% having less than 25K, but I do think that many are undersaving for retirement.

[MonkeyMama]

I think on some level it's an exaggeration, but on another level it is *very* true.

I think on an exaggeration part, they are excluding pensions, social security, etc. Non-retirement savings, and on and on.

Where we live, I know a number of people (age 25 - 45-ish) who are not saving a penny for retirement. For my tax clients, many of the young ones will probably inherit family money some day. I have people making $120,000 who can't spare a penny for their 401k. I told a woman with about $150k income that she would get a 40% tax break (fed/state) on an IRA contribution. She was getting a $10k refund regardless. She said they just couldn't spare it. I can only think: & to be clear, if it is just one or two people, whatever. The problem is that it is *everyone.* & that is why it blows my mind. They decided to put $0 into their 401k and IRAs this year. Problem is they made the same decision thier whole lives - they are steadily employed, and so on. I am not talking people who are skipping contributions during hard times. I hope their family money comes through. This could be why they are less concerned than average.

Since my spouse has been out of the workforce 10 years, people all the time just assume we don't contribute to retirement. ??? I believe it's just the culture. If someone sees you have less debt and less income, then they have to presume something has to give. I have been told over the years I really should think about my retirement. Ha! {We save above average, so I always find those comments funny. Especially when people clearly believe we save $0 for retirement}. I admit I do know some people who are thinking about retirement. Clearly these comments aren't from the $0 savers. But I share, because there does tend to be a belief that retirement savings is impossible below a certain income level. & around here, that "income level" is VERY high!

[riverwed070707]

IDK from my own experience it doesn't really surprise me simply because most people I know of that age don't have adequate retirement. If those around me aren't saving, why should I assume those not around me are?

My mom is 43 and doesn't have a retirement account. No savings. Not a dime.

My dad is 47 and lost his house to foreclosure two years ago. They cashed out their retirement savings before it came to that.

My MIL is in her mid 50s, is on long-term disability and cannot work and can barely afford to eat. FIL works when he feels like it. Their retirement plan is to live off social security and disability.

Dad #2 has worked for the government his whole career and has a good retirement in place. Of our 4 sets of parents, only one is prepared... that's 25%.

[riverwed070707]

On the flip side, I'm proud to say I'm not following in their footsteps and at 26 I have more than that in my retirement Guess its a good start!

[disneysteve]

This doesn't surprise me at all. We often hear that 60% of Americans live paycheck to paycheck so that would correlate with 60% having no savings.

I have no idea what these people are planning on doing when they get older, other than working until they die.

[herdjohnson]

FYI - here's the article:

Retirement confidence remains at record low for workers - Mar. 13, 2012

[greenskeeper]

This doesn't surprise me at all. We often hear that 60% of Americans live paycheck to paycheck so that would correlate with 60% having no savings.

I have no idea what these people are planning on doing when they get older, other than working until they die.

look for a govt handout

I am also not surprised at all by that number, might even be higher. If people can hardly afford (or not afford) to live the way they do what makes you think they'll set aside money for retirement.

[cooliemae]

If you want to see the actual paper where cnn got the info....

EBRI: 2012 Retirement Confidence Survey

[bones72]

Not only do I believe that to be true, but actually, I believe CNN is counting pensions and automatic deductions as savings. When selling cars in the "city", the first thing was to qualify the "up" or walk-in customer to see if they could either qualify for financing, or had any cash at all. It was pathetic how many people couldn't afford to think about cars, but were trying to buy something they couldn't even afford to maintain.

[LivingAlmostLarge]

Depends. Is that $25k in retirement? It can take awhile if you make $50k and saving 15% or less starting out.

[ecoadapt]

That being said, i do agree that many people are not prepared for retirement. I don't know about the 60% having less than 25K, but I do think that many are undersaving for retirement.

I also have same opinion,there are a lot of people who aren't saving properly. I don't know if it's because changes in spending wisely or they just don't get enough time to save.

That 60% could grow higher!

[jpg7n16]

If you want to see the actual paper where cnn got the info....

EBRI: 2012 Retirement Confidence Survey

Thank you for posting this. I always like to see the actual source

From: http://www.ebri.org/pdf/briefspdf/EB...No369_RCS2.pdf

Savings and Investments
A sizable percentage of workers have virtually no money in savings and investments. Among RCS workers providing this type of information, 60 percent report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000. This includes 30 percent who say they have less than $1,000 in savings (up from 20 percent in 2009 but statistically equivalent to the 27 percent measured in 2010 and 29 percent in 2011). Approximately 1 in 10 each report totals of $25,000–$49,999 (10 percent), $50,000–$99,999 (10 percent), $100,000–$249,999 (11 percent), and $250,000 or more (10 percent) (Figure 18). Retirees provide similar estimates of total household savings (Figure 19).

These findings are similar to some other estimates of American household assets. Quantifiable data from the 2007 Survey of Consumer Finances (conducted by the U.S. Federal Reserve Board) found that the median (midpoint) level of household assets of Americans who have these assets was $25,300.

Older workers tend to report higher amounts of assets. Nineteen percent of workers age 45 and older cite assets of $250,000 or more (vs. 1 percent of workers age 25–34). At the same time, 77 percent of workers age 25–34 have total savings and investments of less than $25,000, compared with 48 percent of workers age 45 and older. As one might suspect, total savings and investments increase sharply with household income, education, and health status. Workers who have done a retirement savings needs calculation (compared with those who have not) tend to have higher levels of savings. In addition, those who have saved for retirement are more likely than those who have not saved to have substantial levels of savings. In fact, nearly two-thirds (63 percent) of those who have not saved for retirement say their assets total less than $1,000.

[riverwed070707]

Depends. Is that $25k in retirement? It can take awhile if you make $50k and saving 15% or less starting out.

I don't agree. I have been contributing to retirement for less than 5 years, make less than $50k (well I did until recently) and contribute(d) less than 15% and I have more than $25k. People just aren't taking the first steps. My company does have a match and I understand not everyone has that benefit, but you can't blame it on being hard to do; its just a matter of living within your means and setting your budget after those contributions have been made.

5 years is a small amount of time to sacrifice in comparison to those who are nearing retirement and haven't saved. It only gets harder as the years pass.

[kv968]

One of the best things I think the gov't has recently allowed companies to do is to automatically sign people up for a 401k when they are hired. They can opt out of course if they'd like but they have to go online or call and do it. Whereas in the past you had to sign up to initiate it. With the old method there was too much of the "Oh yeah, I'll get to that." and either they do eventually (possibly years down the road) or not at all.