retirement savings

1 in 3 Americans have less than $5,000 in retirement savings

by Ana Sandoiu Insurance Forums, May 30, 2018

Americans feel underprepared for the financial realities of retirement, according to new data from Northwestern Mutual. Nearly eight in 10 (78%) Americans are “extremely” or “somewhat” concerned about affording a comfortable retirement while two thirds believe there is some likelihood of outliving retirement savings.

  • 1 in 5 Americans (21%) have NO retirement savings at all
  • 1 in 3 Baby Boomers (33%), the generation closest to retirement age, only have between $0-$25,000 in retirement savings
  • Three quarters of Americans believe it is “not at all likely” (24%) or only “somewhat likely” (51%) that Social Security will be available when they retire
  • Nearly half (46%) of adults have taken no steps to prepare for the likelihood that they could outlive their savings

“As financial implications of retirement become increasingly complex, inertia just isn’t an option,” said Rebekah Barsch, vice president of planning for Northwestern Mutual. “The good news is that it’s rarely too late to start. In fact, we often compare financial and physical fitness because the hardest part is taking the first step. However, once people commit to a strategy and start seeing positive results, they’re motivated to meet and even exceed their goals.”

This is the initial set of findings from the 2018 Planning & Progress Study, an annual research project commissioned by Northwestern Mutual that explores Americans’ attitudes and behaviors toward money, financial decision-making, and the broader landscape issues impacting long-term financial security.

Living long... and working longer

Concerns about financial security in retirement are leading people to work longer. In fact, more working Americans anticipate retiring at 70 years or older (38%) than in the more traditional 65-69 age range (33%).

Among the more than half (55%) of Americans who believe they will have to work past age 65 from necessity, 73% cited “not enough money to retire comfortably” as the dominant driver.

Other reasons mentioned include:

  • Social Security not being sufficient to take care of their needs (61%)
  • Concerns over rising costs like healthcare (52%)

For those who plan to work past 65 by choice, disposable income (55%) and professional satisfaction (54%) were near equal motivators. This is a notable contrast to 2015 Planning & Progress Study findings where career enjoyment was the leading driver (66%) followed by interest in additional income (60%).

“Continuing to work later in life should be a personal choice not a mandatory requirement for survival,” Barsch said. “Proactive financial planning can be the difference between a desired and a default retirement lifestyle.”

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