The Great Recession, a crisis in the labor market and the rising cost of living are often some of the reasons why a significant number of Americans fail to save enough for a rainy day or for their retirement.
According to Country Financial’s new Financial Security Index, one-in-four Americans is not saving for retirement at all because they are not thinking about it, do not understand how to or do not feel they can afford to do so. This is a troubling number for citizens and government pension systems.
Forty-six percent of Americans who are not saving cite their middle-class income as not being enough to put money away. This is a statistic that has risen since 2011. Furthermore, there is a severe lack of knowledge in regards to saving. For instance, more than half (55 percent) of Americans are unsure if they’re participating in a company 401(k) plan and nearly one-third of the 45 percent who do know are unsure how the money is being invested.
The most upsetting statistic from the report is that close to one-third (32 percent) of millennials – Americans aged between 18 and 29 – are not saving at all for their winter years. It mostly boils down to two aspects: 20-somethings are too much in debt with student loans or retirement is too far in the future to consider.
Study authors say not contemplating about your retirement finances is one of the biggest regrets of Baby Boomers and retirees today. Thirty-eight percent of those who are 40 years of age and older say they’ve made incorrect decisions in terms of savings and nearly half say not saving early enough is one of the biggest factors.
Of course, for those who are financial savvy and save enough, 43 percent assess the health of their retirement savings every few months or so.
A Retirement Crisis
We have been reporting extensively of the various reports that suggest a sort of retirement crisis is engulfing the United States. The reports, data and studies often note that Americans are not saving for retirement or they believe their standard of living will diminish once they hit their golden years.
A Franklin Templeton Investments survey found that more than one-third (39 percent) of non-retirees have decided to remove saving for retirement from their to-do lists. Meanwhile, a Transamerica Center for Retirement Studies survey discovered that one-third of American workers expected a lower standard of living in their retirement and 41 percent say it’ll stay the same.
“Retirement saving has been a concern for a long time and, with the government’s recent focus on the issue, it is our hope that Americans will begin to use the resources available to them to better plan for what’s next,” said Michael Doshier, vice president of Retirement Marketing for Franklin Templeton Investments, in a statement.
“There are a few simple steps you can take to prepare for what’s next, including acknowledging your own retirement goals and concerns, learning about the various sources of income and matching them to your likely expenses. A financial adviser can help you establish a retirement income investment plan tailored to your future needs and aspirations.”
