Millions Unprepared For Retirement

[rk911]

Saw an item in The Motley Fool column in the biz section of our local paper. The article claims that almost 1 in 5 workers has less than $1000 saved or invested. And just a third have less than $25k. Really worrisome is 28% of non-retired Americans have no retirement savings! wow!

------

Millions Unprepared for Retirement

You’re not alone if you’re behind in saving and investing for retirement. Fortunately, it’s probably not too late to improve your situation.

According to the EBRI’s 2023 Retirement Confidence Survey, almost 1 in 5 workers has less than $1,000 saved or invested, and a third of workers have less than $25,000. Meanwhile, per a Motley Fool Ascent study using Federal Reserve data, 28% of nonretired Americans have no retirement savings at all. Yikes!

That’s bad news, because while most of us can look forward to Social Security income in retirement, it may not provide as much as we’re hoping for. The average retirement benefit recently totaled only about $22,000 per year. Those who earned more than average over their working lives will receive more than that, but it will still fall far short of preretirement incomes.

 

[Fermion]

What % of workers are under age, say 30?

If it is around 20% then the numbers make sense because that age group does not tend to save.

 

[JBTX]

I have been hearing this for many years. I can only assume that a lot of these people get by on social security and support from family, or perhaps leverage some of their home equity.

 

[Aerides]

What % of workers are under age, say 30?

If it is around 20% then the numbers make sense because that age group does not tend to save.

Exactly, I had a pittance before 30, despite having access to a 401k. Under $1k savings in most of my 20's.

Turned out just fine.

 

[Gumby]

Saw an item in The Motley Fool column in the biz section of our local paper. The article claims that almost 1 in 5 workers has less than $1000 saved or invested. And just a third have less than $25k. Really worrisome is 28% of non-retired Americans have no retirement savings! wow!

------

Millions Unprepared for Retirement

You’re not alone if you’re behind in saving and investing for retirement. Fortunately, it’s probably not too late to improve your situation.

According to the EBRI’s 2023 Retirement Confidence Survey, almost 1 in 5 workers has less than $1,000 saved or invested, and a third of workers have less than $25,000. Meanwhile, per a Motley Fool Ascent study using Federal Reserve data, 28% of nonretired Americans have no retirement savings at all. Yikes!

...

This is a little bit of clickbait. If we consider "workers" to be those between 20 and 64 years old, there are 194.8 million of them in the US. Of that group, 45.9 million (or 24%) are 29 or younger, and 69.2 million (or 36%) are 34 or younger.* I would expect that group to have little to nothing in retirement savings or, indeed, savings of any kind). I know I am not up to the standards of the illustrious members of this board, but when I graduated from law school I was 33 and had no retirement savings. (Yes, the young wife and I saved in our 20s, but we used all the money we saved to pay for graduate school and law school, respectively, and a down payment on a house.)

*https://www.statista.com/statistics...ation of the,and around 11.47 million females.

 

[Sunset]

They don't count home ownership in savings, which is where all/most of my money went when really young...

 

[disneysteve]

40% of retirees get all or most of their income from SS so it’s no surprise that a similar % would have nothing saved.

 

[Helen]

There are a lot of workers, including older workers, in low paying jobs. I'm not sure how some people are getting by while working full time.

 

[Car-Guy]

I've been working since my early teens, and never could get any $ ahead until maybe my mid 30's. School, marriage, house, kid, life, etc. By my early 40's "somehow" I started getting a few $ ahead. By the time I retired at 60, I had millions and I did it by just working for a mega corp.

Should have just started at 40.

 

[38Chevy454]

Agree with the comments about needing some context about the worker's age. My savings were minimal in 20s, although I did save like crazy to buy my first house and required down payment money. I think that was a good tradeoff.

Although many reports have a lot of near retirement age folks having little saved, their options are get by on SS and little savings, or keep working well into their 60s or even 70s.

 

[jollystomper]

Let us go to the source, the 2023 ERBI (Employee Retirement Benefits Research Institute) to examine their methodology:

https://www.ebri.org/docs/default-source/rcs/2023-rcs/2023-rcs-short-report.pdf

The RCS is the longest running survey of its kind, measuring worker and retiree confidence about retirement, and is conducted by the Employee BenefitResearch Institute (EBRI) and Greenwald Research.

The 2023 survey of 2,537 Americans was conducted online January 5 through February 2, 2023. All respondents were ages 25 or older. The survey included 1,320 workers and 1,217 retirees - this year included an oversample of roughly 944 completed surveys among caregivers (598 workers and 346 retirees).

Data were weighted by age, sex, caregiver status, household income, and race/ethnicity. Unweighted sample sizes are noted on charts to provide information for margin of error estimates. The margin of error would be ±2.8 percentage points for workers, ±2.9 retirees, and ±3.3 for caregiver respondents in a similarly sized random sample.

Their key findings:

Compared with 2022, both workers’ and retirees’ confidence have significantly dropped and returned to levels last seen in 2018. The last time a decline in confidence of this magnitude was observed was in 2008 during the global financial crisis.

Sixty four percent of workers feel at least somewhat confident, with only 18% feeling very confident. While retirees’ confidence is slightly higher than workers’, still less than three quarters feel at least somewhat confident, with only 27% feeling very confident.


Among those who do not feel confident, 4 in 10 workers and a quarter of retirees state it is due to having little to no savings. Inflation also has a large impact on Americans’ certainty, with 29% of workers and 42% of retirees stating this is the reason for their lack of confidence.

Americans believe the elevated inflation rates the United States has seen are not going away any time soon, with roughly 8 in 10 workers and retirees reporting they are concerned inflation will remain high for at least the next 12 months. Additionally, three quarters of Americans are fearful that the U.S. economy will go into a recession over the next year.

The entire report is 43 pages, including charts and graphs. I prefer to read directly the sources these articles reference, to get the right non-clickbait context .

 

[jebmke]

I think something like 1/3 of the households in the US have income less than $50K so this doesn't seem like an anomaly.

 

[Retired Expat]

Exactly, I had a pittance before 30, despite having access to a 401k. Under $1k savings in most of my 20's.

Turned out just fine.

Need to clarify “Savings” versus net worth for these discussions. I wanted to be worth a million dollars by 30. I made it no problem but my retirement savings were zero. Only after 35 did I start to “Save”!

 

[523HRR]

While I regularly see these stats showing that many people are unprepared for retirement, I see few stories of people that have completely run out of money. I’m curious what flat broke looks like in retirement. Taxpayer-funded programs? Charitable donations? Family support? Homeless?

 

[Gumby]

While I regularly see these stats showing that many people are unprepared for retirement, I see few stories of people that have completely run out of money. I’m curious what flat broke looks like in retirement. Taxpayer-funded programs? Charitable donations? Family support? Homeless?

In my state (CT) and town

Regular Social Security, SSI, CT State Supplemental Program, Medicaid/Medicare dual eligibility, Section 8 housing, CT Elderly Housing projects, CT Home Health Care for the Elderly, CT Energy Assistance Program, CT Drug Assistance Program, SNAP benefits, CT Housing Finance Authority reverse mortgages, CT Elderly Nutrition program for meals at the town senior center, CT Older Worker Program and Senior Community Service Employment Program, food pantries at local churches.

 

[jebmke]

In my state (CT) and town

Regular Social Security, SSI, CT State Supplemental Program, Medicaid/Medicare dual eligibility, Section 8 housing, CT Elderly Housing projects, CT Home Health Care for the Elderly, CT Energy Assistance Program, CT Drug Assistance Program, SNAP benefits, CT Housing Finance Authority reverse mortgages, CT Elderly Nutrition program for meals at the town senior center, CT Older Worker Program and Senior Community Service Employment Program, food pantries at local churches.

Similar in MD, without digging into specifics.

Doing taxes for seniors, I get a lot who live with extended families so they are sharing a lot of expenses. Quite a few work part-time in retirement.

 

[Sunset]

In my state (CT) and town

Regular Social Security, SSI, CT State Supplemental Program, Medicaid/Medicare dual eligibility, Section 8 housing, CT Elderly Housing projects, CT Home Health Care for the Elderly, CT Energy Assistance Program, CT Drug Assistance Program, SNAP benefits, CT Housing Finance Authority reverse mortgages, CT Elderly Nutrition program for meals at the town senior center, CT Older Worker Program and Senior Community Service Employment Program, food pantries at local churches.

I should move to your town and live free !!

Seriously, I know a really cheap fellow, that lives on SS , he does have some money saved, but getting him to spend it is like pulling teeth..

 

[disneysteve]

In my state (CT) and town

Regular Social Security, SSI, CT State Supplemental Program, Medicaid/Medicare dual eligibility, Section 8 housing, CT Elderly Housing projects, CT Home Health Care for the Elderly, CT Energy Assistance Program, CT Drug Assistance Program, SNAP benefits, CT Housing Finance Authority reverse mortgages, CT Elderly Nutrition program for meals at the town senior center, CT Older Worker Program and Senior Community Service Employment Program, food pantries at local churches.

Keep in mind that many of the above programs are INCOME based, not ASSET based. A senior could have substantial savings and still qualify for many of those things if their income is low enough.


My mom gets subsidized housing, energy assistance, prescription drug assistance, a box of donated food monthly (I think), reduced price meals, and probably some other assorted things based on her income. Her portfolio is right around 350K.

 

[jimbee]

Not surprising. You can see the 2022 wage statistics here: https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2022
The bottom 22% of workers made less than $15,000 annually in 2022 as recorded by their employers on Form W-2. Good luck building significant savings at that income.

 

[MC Rider]

Good luck surviving on $15k a year.


Sucks to be them.

 

[Car-Guy]

Not surprising. You can see the 2022 wage statistics here: https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2022
The bottom 22% of workers made less than $15,000 annually in 2022 as recorded by their employers on Form W-2. Good luck building significant savings at that income.

That is a disturbing number. Assuming that's full time employment that would seem like slave wages these days.

 

[aaronc879]

What % of workers are under age, say 30?

If it is around 20% then the numbers make sense because that age group does not tend to save.

I saved pretty all the money I will save in my life when I was in my 20's. Everyone's situation is different.

 

[aaronc879]

I think something like 1/3 of the households in the US have income less than $50K so this doesn't seem like an anomaly.

I have never earned even $50K in a year in my life yet I had six figures saved before age 30. Unfortunately sh!t happens and I have saved very little since 30 and will probably save nothing going forward(age 44 now) but at least I got an early start.

 

[MC Rider]

I have never earned even $50K in a year in my life yet I had six figures saved before age 30. Unfortunately sh!t happens and I have saved very little since 30 and will probably save nothing going forward(age 44 now) but at least I got an early start.

You must have been very frugal. Most 20 somethings cannot save like that. I couldn't.

 

[aaronc879]

Good luck surviving on $15k a year.


Sucks to be them.

I spent ~$14K in 2021 and 2022 not counting the $24K I spent on a new car in 2022 and will likely end up around $12K in 2023. Yes, it does suck to be me and money absolutely would buy happiness for me but a person CAN live on $15K/yr if needed.