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28% of Americans Stare Down Retirement with Nothing Saved

Americans aged 18 to 65 and beyond find themselves unprepared for retirement.
Cover Image Source: Retirement Savings | Unsplash | Photo by Towfiqu barbhuiya
Cover Image Source: Retirement Savings | Unsplash | Photo by Towfiqu barbhuiya

As the cost of living continues to rise, retirement savings for many Americans are virtually nonexistent, painting a grim picture of their golden years. According to a recent survey by GoBankingRates, 28% of Americans have absolutely nothing saved for retirement. This alarming statistic is coupled with the revelation that 39% are not contributing to any retirement fund, while another 30% harbor doubts about ever being able to retire comfortably.

Image Source: Pexels|Photo by T Leish
Image Source: Pexels | Photo by T Leish

Not being able to save for retirement is a multifaceted issue affecting a large number of the population. Americans aged 18 to 65 and beyond find themselves unprepared for retirement.

Data from the Survey of Consumer Finances highlights that nearly half of American households lack any form of retirement savings. This encompasses various accounts such as individual retirement accounts (IRAs), employer-sponsored accounts like 401(k)s, 403(b)s, and pensions, among others.

Moreover, the decline in traditional pension plans further exacerbates the retirement savings crisis. While half of working households aged 50 to 60 had defined benefit plans in 1989, this number dwindled to a mere quarter by 2022. As a result, individuals are becoming increasingly reliant on personal savings to fund their retirement.

Image Source: Nora Carol Photography/Getty Images
Image Source: Photo by Nora Carol Photography | Getty Images

Despite the importance of personal saving, the reality is sobering. Only a fraction of households have amassed substantial retirement nest eggs. In 2022, only 26% reported savings exceeding $100,000, with 9% boasting balances exceeding $500,000.

The disparity is particularly stark among age groups, with those aged 50 to 54 exhibiting higher savings rates compared to their younger counterparts.

"While alarming, the statistic does not surprise me. This highlights a widespread financial literacy gap and underscores many challenges in balancing immediate financial needs with long-term savings goals," stated Financial expert Edward Piazza, president of Titan Funding.

Pexels | Anna Shvets
Image Source: Pexels | Photo by Anna Shvets

The reliance on Social Security benefits underscores the precarious financial position of many retirees. With eligibility for full retirement benefits set at 67 for those under 63, a substantial portion of retirees will have to stretch meager savings to bridge the gap.

The median household between the ages of 30 and 34 possesses paltry retirement savings of $4,700, a significant difference compared to the $20,100 in overall financial assets. Similarly, households aged 55 to 59 fare marginally better, with median retirement savings of $24,500 but face a bleak net worth of $30,700.

Moreover, the savings landscape is further complicated by disparities in asset distribution. While most households maintain modest balances in checking and savings accounts, some lack substantial financial assets. Furthermore, only 12% of households possess more than $100,000 across both account types.

Image Source: Kinga/Getty Images
Image Source: Photo by Kinga | Getty Images

"The statistic that 30% of Americans have $0 saved for retirement is alarming but not surprising," said retirement planning expert Mike Kojonen, founder and owner of Principal Preservation Services. "Through countless consultations, I’ve observed a prevalent lack of awareness about the cost of retirement and a significant underestimation of how much needs to be saved."

While some households boast net worth exceeding $100,000, a sizable segment remains precariously positioned for retirement. The absence of adequate savings amplifies the importance of financial literacy and planning initiatives to empower individuals to navigate their retirement journey effectively.