Retirement Shocker: 60% Of Workers Have Less Than $25,000 Saved

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RetirementBy Blake Ellis, CNNMoney

NEW YORK -- Concerns about job security and piles of debt have left American workers more pessimistic about retirement than ever.

Only 14 percent of workers feel "very confident" that they will have enough money to live comfortably in retirement, while 38 percent of workers say they are "somewhat confident" and 23 percent say they are "not at all confident," according to a survey by the Employee Benefit Research Institute. The results have remained relatively unchanged since hitting an all-time low in 2009.

Many respondents said that saving for retirement has taken a backseat to more immediate financial concerns. About 42 percent of survey respondents said a lack of job security is the biggest issue they are facing, with only 28 percent of workers saying that they feel very confident they will have a paying job for as long as they need it. Meanwhile, a whopping 62 percent -- nearly two-thirds -- of workers said their debt is a problem.

As a result, many workers barely have any savings, with about 60 percent of workers reporting total savings and investments of under $25,000 (excluding the value of their home and defined benefit plans). About 30 percent of these respondents said they have less than $1,000 in savings.

Super Young Retirement Savers

In addition, far fewer people are saving for retirement. The percentage of workers who said they were putting money away for retirement fell to 66 percent in 2012 from 75 percent in 2009. People earning less than $35,000 account for the majority of that decline -- most likely because they have either lost their jobs or are worried that they may be out of work in the future, the report found.

"A lot of the people who have either lost their jobs or are worried about losing their jobs are trying to put a little money away for a rainy day and just don't have money to put into savings right now," said Jack VanDerhei, EBRI research director and co-author of the report.

Out of those who have started planning and saving, 67 percent say they are behind schedule. This is unchanged from 2011, but 12 percentage points higher than the 55 percent of workers who were behind schedule in 2005.

How I'm Easing Into Retirement

Medical costs are also a major concern, with only 13 percent of respondents reporting that they are very confident they will be able to afford medical expenses when they retire. Only 26 percent of workers are very confident that they will even have the money to pay for basic expenses.

While workers' lack of saving and confidence in their ability to retire comfortably is troubling, VanDerhei said it's good that people are becoming more realistic about their financial situations. In 2009, following the economic downturn, many workers clung to overinflated expectations about their retirement future.

However, instead of putting more money into savings, more people are opting to delay retirement, with 37 percent of respondents expecting to retire after age 65. That's up from only 11 percent in 1991.

It's a dangerous strategy since many of these people may not be able to continue working as long as they plan to, said VanDerhei. About half of current retirees say that they left the workforce unexpectedly because of health problems, a disability, or an employer that downsized or closed, according to the report.

"[I]t's one thing to say you're going to work beyond 65, it's another to actually make it that long," he said. There was one bright spot in the survey, said VanDerhei. An increasing number of employers are automatically enrolling employees in retirement plans like 401(k)s, and many employers are automatically increasing contribution levels each year.



When Will You Be Able To Retire?

Automatic enrollment has helped many lower-income workers who otherwise wouldn't choose to contribute to a plan realize that they are actually able to contribute small amounts without going broke, he said. If they can't afford to make those contributions, they can always opt out.

Workers with employer-sponsored retirement plans are typically much more confident than people without these plans, said VanDerhei. Of the workers contributing to an employer-sponsored retirement plan, 64 percent are very confident or somewhat confident that they can live comfortably through retirement. That percentage drops to 48 percent for workers without employer-sponsored plans, according to the report.

"We continue to find that employees lucky enough to be working for an employer that sponsors retirement plans -- and who choose to take advantage of it -- are not only much more likely to have a significantly higher amount of retirement savings, but also much higher confidence," said VanDerhei.



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19 Comments

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jnfrmo

It's funny...I am a server ( a lifer as "they" say) and still people ask me when I will get a real job...if I am going to school or what else I do. The thing is, 60+% of people don't have their **** together yet 60+% of people are the ones to wonder about "real" jobs. Did you know that 95% of people at the age of 65 don't have enough money to retire...I bet they have a "real" job too! Lucky them. We are a bunch of conformists conforming to the wrong people and ideas.
Jennifer
http://iamWaitress.com

September 10 2012 at 10:16 PM Report abuse rate up rate down Reply
kenno2012

It doesn't matter what you have or save....as the Federal Reserve continues to print worthless dollars....we are all holding a handfull of nothing. It all started with Nixon and the Jew Kissenger...they sold us out to the Commies in China, stole all of the gold that backed our currency and now like the Titanic we are sure to sink!!!
Those Bush bastards sold us out to the Nazi's and created 911 after great profit...it is time for us to go!! You see if a lie is repeated enough...it becomes the truth!!!!

April 26 2012 at 1:37 PM Report abuse rate up rate down Reply
Nicola Vivaci

if you didn't try to keep up with the jones and just tried to keep up with the smith's you would be better off.
I work with some people who worry how they are going to feed their kids for the week, but than pull out their
brand new phones and check what the weather is going to be today. Than they proceed to leave work early in
their brand new car, not a used car, a brand new one.

March 30 2012 at 6:09 AM Report abuse +1 rate up rate down Reply
Philinbos

As my late father told me "pay yourself first" (I.E. SAVE)
"watch your pennies and the dollars take care of themselves" Ben Franklin(?)
'Nuff said!

March 18 2012 at 9:54 AM Report abuse +1 rate up rate down Reply
bolten2

I dont understand the math. 14%are very confident and 38% are somewhat confident.. That is 52%. Yet 60% have less than $25,000 in retirement savings. California dreamin

March 16 2012 at 10:08 AM Report abuse rate up rate down Reply
ha6ai

As I suspected, this "article" really is misleading leftist propaganda:

The "study" included "workers" from AGE 25 and up, terribly "skewing" the results. So why the frantic headline: "Retirement SHOCKER"? OF COURSE most don't have more than $25,000 in liquid savings. Most are not even middle-age, when savings begin in earnest.

Here is the study's "methodology":

"RCS Methodology ,,, The survey was conducted in January 2011 through 20-minute telephone interviews with 1,258 individuals (1,004 workers and 254 retirees) AGE 25 and older in the United States. Random digit dialing was used to obtain a representative cross section of the U.S. population. ... Starting with the 2001 wave of the RCS, all data are weighted by age, sex, and education to reflect the actual proportions in the adult population." (emphasis added).

There is nothing "shocking" about this study. It did not bother to break out the attitudes and savings of adults ANYWHERE NEAR retirement.

3 kinds of LIes: Lies, Damn Lies, and Statistics.

This is the problem with AOL/HuffPuff "liberal" propaganda - easily manipulated and misrepresented.

March 16 2012 at 3:51 AM Report abuse rate up rate down Reply
ha6ai

This article bit deceptive, and therefore it has an "agenda".

A 25 year-old "worker" with $25,000 in savings is doing very well.

Middle-age workers with defined-benefits retirement plans (probably a union, and definitely a government worker), particularly with a paid-off or soon-to-be-paid-off house, are also doing very well (even with only $25,000 in ready cash).

There are certainly some people who have found themselves in difficult financial circumstances through no fault of their own, and that is what society's "safety-nets" are for. There also no doubt that milions have been the victims of Obama's disastrous policies resulting in high unemployment, high underemployment, and high inflation (like energy prices). Hopefully he will be voted out and things will get better.

But, for most people, they can choose to spend less and save more, and will later have only themselves to blame if they do not.

March 16 2012 at 3:04 AM Report abuse +1 rate up rate down Reply
cabo79

This is the way it has been and still is. About 1/3 of people who have retired have SS as their only source of income, about $100 a month. The next third have SS as their major source of income, they get between $100 and $200 a month. ONLY 1/3 have more than that to retire on and a great number of them are Government Retires.

March 15 2012 at 11:22 PM Report abuse -2 rate up rate down Reply
meddvm

The fact is that most people underestimate how much they need and most undersave. AND THEY ALWAYS HAVE. Additionally, medical costs have grown far faster than inflation and will destroy even a good savings with any major medical incident. This is why they created Social Security in the first place - to reduce the poverty of the elderly. The Ann Rynd Uberlibertairian free market types forget that the philosophy is based on the idea of exceptionalism - only a few are exceptional. Great if that is you, but most people will not be exceptional. And large numbers in poverty is not good for society - so we have progressive taxation and social safety-net. Social security should be means tested - Warren Buffet is a billionaire and doesn't need it but is currently entitled to it.

March 15 2012 at 8:08 PM Report abuse rate up rate down Reply
rogsuehull

I am saddened by how many poor people use their money. Building wealth is a lifelong plan that one has to work for, it is not instant riches like winning the lottery or getting an inheirantance. Drive an economical used car with a 4 cylinder engine. Pay $100 extra each month on your mortgage. Buy your furniture at garage sales. Do not eat potatochips or guzzle soda pop. Cook your own meals with fresh vegatables. Do not buy the latest electronic gadgets. Getting wealthy is achieved by not keeping up with your neighbors, but getting ahead of them. Waste not, want not.

March 15 2012 at 10:01 AM Report abuse +6 rate up rate down Reply
1 reply to rogsuehull's comment
chris1011

Absolutely golden advice!

March 15 2012 at 3:07 PM Report abuse +2 rate up rate down Reply