America is So Completely Unprepared For Retirement it’s Actually More Funny Than Sad
- Joshua M Brown
- October 12th, 2012
I'd add a comment to the below statistics compiled by the ConvergEx Group market strategists but my derision and black humour would almost be redundant when positioned around the facts themselves. If you were writing a brochure for a post-apocalyptic wonderland of woe and fear, you likely couldn't trump the foreboding effect produced by what's below:
Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away, not including home equity or defined benefit plans. Even worse, a full 30% have less than $1,000. A meager 10% have $250,000 or more. (For comparison’s sake, a quick survey of different retirement advisors’ websites showed that the average recommended savings is about 8x-10x final salary – by some estimates, around $1 million)
While these low savings might be expected of the youngest age cohort, almost half (48%) of workers ages 45 and up have less than $25,000 saved.
Savings rates and the amount saved are strongly positively correlated to education, income, and health status. 93% of those making more than $75,000 are saving, compared to 35% of those with and income of $35,000 or less.
Only 38% of all American workers participate in an employer-sponsored retirement savings plan. That said, only 74% are offered this kind of plan. Of those that choose to participate (81%), savings and investments typically total at least $50,000.
34% of workers that had saved said they have had to dip into their savings to pay for everyday expenses. 22% of retirees claim they’re taking more than they thought they would out of their accounts, depleting their savings even faster than they anticipated.
I don't know what to tell you...I think you probably have to laugh to be able to process this, like if an oak tree collapsed and cleaved your car in half during an overnight thunderstorm.
Hopefully an improved economy that can grow above 3% without constant Fed breastfeeding can reverse these trends over a long enough period of time to heal so many woefully unprepared people.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.