42 percent of adults are not saving for retirement

[JustCurious]

I know this is not a surprise for most on this board, but I thought it was an interesting statistic and it serves as a reminder of just how different we are compared to many.

Millions of workers today are banking on Social Security to pay their bills in retirement. But while those benefits will provide a nice chunk of income, they won't be enough to sustain future retirees by themselves. So, working adults today must take saving matters into their own hands by socking away funds in whatever retirement plan they have available, whether it's an employer-sponsored 401(k) or an IRA.

The problem, however, is that 42% of adults aren't saving for retirement at all, according to a new report by the Center for Financial Services Innovation. And if they don't change their ways, they're apt to struggle financially later in life.

https://finance.yahoo.com/news/won-apos-t-believe-many-124300883.html

 

[jimbee]

Not surprising, since about 42% of adults don't pay federal income tax. They don't make enough money, and "they're apt to struggle financially" right now.

 

[Nick12]

Know many residents in my state (FL) that don’t save for retirement but take several cruises during the year and spend thousands of dollars during Black Friday weekend every year and complain they don’t make enough $$.

 

[USGrant1962]

Millions of workers today are banking on Social Security to pay their bills in retirement. But while those benefits will provide a nice chunk of income, they won't be enough to sustain future retirees by themselves. So, working adults today must take saving matters into their own hands by socking away funds in whatever retirement plan they have available, whether it's an employer-sponsored 401(k) or an IRA.

And that will be a surprise to the 35% or so of SS recipients who rely on SS for >90% of their income.

That is not a happy statistic, but SS is doing its job as a safety net, IMO.

 

[Col. Klink]

Know many residents in my state (FL) that don’t save for retirement but take several cruises during the year and spend thousands of dollars during Black Friday weekend every year and complain they don’t make enough $$.

I have neighbors like that as well. Most of mine in that boat (literally) have pensions. Sad thing is that when one partner passes, and one pension goes away, the other does not have enough money to meet living expenses and the for sale sign goes up in the yard. The surviving partner tells you they are moving because they now miss their kids and want to be closer to them. Some of these folks are in their seventies and even have a mortgage. They are also the one's who don't understand when I tell them my DW and I are FI with no debt. The next comment often is "did you get a big inheritance?" The concept of LBYM for years and investing (and reinvesting) is foreign to these people who spend every dime of their pension every month.

 

[street]

That number doesn't surprise me. I know one guy I worked with and he is making a large income but they spend a lot of new vehicles, boats and large pull type campers. I would be surprised if they can save that much with all the spending they do. The thing is most that spend like this have a good retirement, with the company they work for. That pension and SS and a small investment portfolio will make retirement good for most.

 

[aaronc879]

Not surprising, since about 42% of adults don't pay federal income tax. They don't make enough money, and "they're apt to struggle financially" right now.

Exactly. While some of that 42% is from people who are just bad with money, most are low income people. These are people who work hard on a full time basis and still only make enough money to barely get by. Too many low end jobs have the same pay as when I started 20 years ago. Everything else went up in price but their wages stayed crazy low while others took all the higher income. Until that changes there will be many millions who can't save for retirement even though they worked very hard.

 

[mountainsoft]

42% of adults aren't saving for retirement at all

That was us!

I had never even thought about retirement till I was in my late 30's. I got one of those junk mail flyers from our bank and started a traditional IRA around age 35. I really didn't understand what I was doing or why, it just sounded like a good idea. We only contributed 1000-2000 per year for the first 4-5 years, so it didn't amount to much.

Also, it sounds stupid now, but we didn't realize my wife had a pension until just about five years ago. We knew they took money out of her check, but figured it was just some kind of savings account. They sent out annual statements showing a "balance" which was some ridiculously low number that didn't seem like it would amount to anything. I was organizing our file cabinet one day and read through her retirement paperwork, only to discover she had a state covered pension. No one ever told us, or if they did we didn't understand what it meant.

Discovering her pension is probably the one item that took us from no retirement planning at all, to saving as much as we could and realizing we might be able to retire early.

The one thing we were doing right before all this was living below our means. We always paid cash for our cars, had zero debt, and built our own house so we never had a mortgage. By the time we started thinking about retirement we had already laid a good foundation.

I kick myself today wondering how we could have been so naive about retirement. We weren't spending extravagantly or anything, we just never thought about it. If only I knew then what I know now...

 

[Which Roger]

If I take what the article is saying literally, there's no problem. The article states that "42% of adults are not saving for retirement at all". Sounds bad, but a quick google search shows that only 63% of adults are in the workforce. Hence almost all working adults are saving for retirement.
It's probably just sloppy writing and they did mean to say "working adults", but they didn't, so who knows what else in the article is misleading or wrong?

 

[Rianne]

That was us!

I had never even thought about retirement till I was in my late 30's. I got one of those junk mail flyers from our bank and started a traditional IRA around age 35. I really didn't understand what I was doing or why, it just sounded like a good idea. We only contributed 1000-2000 per year for the first 4-5 years, so it didn't amount to much.

Also, it sounds stupid now, but we didn't realize my wife had a pension until just about five years ago. We knew they took money out of her check, but figured it was just some kind of savings account. They sent out annual statements showing a "balance" which was some ridiculously low number that didn't seem like it would amount to anything. I was organizing our file cabinet one day and read through her retirement paperwork, only to discover she had a state covered pension. No one ever told us, or if they did we didn't understand what it meant.

Discovering her pension is probably the one item that took us from no retirement planning at all, to saving as much as we could and realizing we might be able to retire early.

The one thing we were doing right before all this was living below our means. We always paid cash for our cars, had zero debt, and built our own house so we never had a mortgage. By the time we started thinking about retirement we had already laid a good foundation.

I kick myself today wondering how we could have been so naive about retirement. We weren't spending extravagantly or anything, we just never thought about it. If only I knew then what I know now...

I have to giggle at this post. Many employers match your 401K contribution and workers don't take full advantage of that benefit. I just do not understand that!

You were contributing all along and didn't realize the benefit and didn't realize the RR on that money. It's like reaching into and old pair of pants and finding $20, except didn't get the 4% RR.

 

[USGrant1962]

If I take what the article is saying literally, there's no problem. The article states that "42% of adults are not saving for retirement at all". Sounds bad, but a quick google search shows that only 63% of adults are in the workforce. Hence almost all working adults are saving for retirement.
It's probably just sloppy writing and they did mean to say "working adults", but they didn't, so who knows what else in the article is misleading or wrong?

The article links to the source survey. The 42% is for all respondents, and the survey represents all adults (including those already retired).

 

[LOL!]

I clicked through to read the report that this article was based on. There are some [-]discrepancies[/-] curiosities:

° 79 percent of respondents said they are saving regularly or whenever possible in savings accounts.
° 75 percent of respondents said they are saving regularly or whenever possible in cash.
° 70 percent of respondents said they are saving regularly or whenever possible in other personal savings vehicles, such as mutual funds, money market
accounts, stocks, certificates of deposit, and annuities.

versus

47% of Americans say their spending equals or exceeds their income.

Check out how you would answer this question:

Q044. At your current level of spending, how long could you and
your household afford to cover expenses, if you had to live only off
the money you have readily available, without withdrawing money
from retirement accounts or borrowing?

Since I am retired and living off my retirement accounts, I would answer 0 days.

 

[mountainsoft]

I have to giggle at this post. You were contributing all along and didn't realize the benefit

I honestly don't know what we were thinking. We knew a bunch of stuff came out of our checks, taxes, union dues, etc. but we didn't really take the time to understand any of it. All we cared was how much did we get to take home and getting the bills paid. I guess we were focused on other things in life. Retirement wasn't even on our radar.

It's hard to look for answers when you don't even know there's a question.

I've learned so much over the last five years, much of it from this forum.

 

[Nick12]

Exactly. While some of that 42% is from people who are just bad with money, most are low income people. These are people who work hard on a full time basis and still only make enough money to barely get by. Too many low end jobs have the same pay as when I started 20 years ago. Everything else went up in price but their wages stayed crazy low while others took all the higher income. Until that changes there will be many millions who can't save for retirement even though they worked very hard.

Had friends and relatives in low paying jobs and struggling. They decided to work during the day, learn a trade or go back to school. Some are now RNs and plumbers. With overtime they make over 100K a year. It was a huge sacrifice and commitment to them and their families. They had to give up some luxuries and necessities and function with little sleep but in the end they are happier.

 

[Which Roger]

I was one of the 42% for a decade or so. I didn't start saving for retirement until I was 30. I was in school until I was 27, and barely able to make ends meet. Then when I got my first real job, all of the saving the first couple years was for a nice down payment on a house.

 

[kgtest]

I know this is not a surprise for most on this board, but I thought it was an interesting statistic and it serves as a reminder of just how different we are compared to many.

Millions of workers today are banking on Social Security to pay their bills in retirement.

Because millions of workers do not know how to do math, nor care to critically think about there future state of financial affairs. They would rather not plan than plan.


I ran the SS.gov PIA calculator...and I can imagine a lot of folks simply wouldn't know where to begin with that. OpenSocialSecurity is a good start but not the exact picture, even still, I reckon a lot of people don't know about it or don't care. Thank goodness for the folks in this forum who do! Saved me a lot of grief in my old age!

 

[Teacher Terry]

Our pensions have a survivor benefits so we both took advantage of that. That’s critical for us because due to WEP our SS might pay for Medicare only.

 

[marko]

But "58% of adults ARE saving for retirement" just doesn't have the same ring to it, does it?

 

[Nick12]

But "58% of adults ARE saving for retirement" just doesn't have the same ring to it, does it?

Not too much newsworthy. Sky is falling and oh my stories get more attention.

 

[MRG]

No surprise, Megacorp used to have the front line managers talk to their teams about retirement and 401k. I heard some interesting things from folks. One gentleman asked I didn't talk about it with him anymore, he felt it was crossing lines with his faith. [emoji111]

 

[mickeyd]

Save early. Save often. LBYM. All items not listed.

 

[ckelly78z]

I personally know several co-workers who have no plans at all of ever getting to retire. They live for today, not tomorrow !

These are the same ones who drive new cars, and have all the toys.

 

[38Chevy454]

I think there are two types of people in the 42%, those that just do not have enough income to save beyond meeting their basic expenses, and those that are just spending away keeping up with the Jones's. The first group will not be able to change their financial position without a significant change in income from working. That means getting a degree while working, which is tough to do; or making a substantial change in career to move up the income scale. The second group can change their savings immediately if they just give up the lifestyle choices and start following a LBYM path to improved financial position. The problem they have is that it is a choice to be in their current position and they do not want to change.

 

[JustCurious]

IThe second group can change their savings immediately if they just give up the lifestyle choices and start following a LBYM path to improved financial position. The problem they have is that it is a choice to be in their current position and they do not want to change.

I agree, you can't make someone change, nor should you try.

I think there are a number of reasons why most people are unable to adequately save for retirement, but one of them is the inability to delay gratification. Some people have the innate ability to delay gratification and save for the future, and most don't, at least accoriding to what I've observed.

 

[aja8888]

I personally know several co-workers who have no plans at all of ever getting to retire. They live for today, not tomorrow !

These are the same ones who drive new cars, and have all the toys.

Did you ever ask them what they are going to do when they can't work anymore (by choice or not by choice)?