Retirement Savings Zero

Startling new data shows Americans are woefully unprepared for retirement. Nearly half of working households have no retirement savings at all.

The picture looks even worse for Baby Boomers. Dreams of lazy afternoons on the golf course are giving way to a harsh reality. Millions will depend totally on Social Security.

If you’re in that group, there’s no time to waste.

***

Retirement is a recent innovation. For most of human history, people worked as long as they physically could. They still do in much of the developing world.

A new report from the National Institute on Retirement Security shows Americans have more in common with our third-world peers than we like to admit. Very few of us are ready to retire and many of us will not if this doesn’t change.

Without Social Security, almost no one will retire comfortably.

Given that Social Security’s long-term survival is far from certain, the fact that few people are saving enough for retirement ought to alarm everyone — young and old.

***

The  National Institute on Retirement Security report looks at survey data the Federal Reserve collected in 2013. It is full of interesting analysis.

However, I want to zoom in on one particular point…

Collectively, we are simply not saving enough to fund retirement.

The median working-age household (age 25-64) has only $2,500 in retirement account assets.

That’s the median retirement balance — meaning that half of all working-age households have saved less than $2,500.

If we look specifically at people approaching retirement (age 55-64), the median retirement savings balance is only $14,500.

That is obviously not enough to let anyone stop working for 10-20 years or more.

Retirement experts suggest you need to save at least 4x your pre-retirement annual income to live a minimally comfortable retirement.

How many folks have done this? Not many.

Among the 55-64 age group, only 9.9% have that level of retirement savings. That means some 90% don’t.

***

Roughly speaking, 90% of Americans born in the 1950s don’t have enough money to retire comfortably. That probably explains why so many Boomers are postponing retirement. They have little choice but to keep working.

This may not be so bad if you are healthy and you enjoy your work. The bigger problem is what happens when you physically can’t work anymore.

What then? I have a few suggestions:

First, postpone that day as long as possible by keeping yourself healthy. The right diet, lifestyle habits and exercise can help extend your working years into your 70s.

Second, be a smart consumer so you can save more money. Mathematically, spending less has the same impact as earning more. It is even better than earning more when you consider taxes.

Third, keep your savings safe and growing. Invest wisely, so your nest egg can earn as much as possible without taking excessive risk.

Fourth, turn Social Security to your advantage by applying for benefits at the optimal time. This can vary depending on your situation. My colleague Nilus Mattive has been writing about this.

***

Do these survey results match what you see? Are you financially ready to retire? If not, what are you doing about it?

I’d like to start a conversation on this. You can leave a comment on our website or send me an e-mail.

***

U.S. stocks rose today as traders continued digesting the latest Federal Reserve news. Dollar weakness was a big factor, with some analysts saying the months-long greenback rally is near its end. Here are some of the headlines I saw.

•  Fed interpretations are all over the place. Some economists still believe a rate hike is coming in June.

•  On the other extreme are those who expect no rate hike this year or even in 2016. The Fed is historically reluctant to tighten policy in election years.

•  Tiffany & Co. (TIF) shares fell after the company warned profits could fall as much as 30% this quarter.

•  The jewelry firm blamed dollar strength for its downbeat forecast. Foreigners are cancelling their shopping trips to the U.S.

•  Gold rose for a third straight session, continuing its see-saw relationship with the greenback.

•  Crude oil bounced, too. The declining dollar helped but so did another fall in the U.S. rig count.

•  Energy bears countered that fewer rigs don’t necessarily mean lower production.

•  Today was “quadruple witching day” on Wall Street — the quarterly expiration date for many futures and options contracts. Some markets were volatile as traders squared up their positions.

Good Luck and Happy Investing,

Brad Hoppmann

Publisher

Uncommon Wisdom Daily

Your thoughts on “Retirement Savings Zero”

  1. I read these types of articles with curiosity, and questions. I’ve often wondered what raw data is looked at to determine the average savings of Americans? Can anyone at your entity write an article as to how exactly these numbers are arrived at.
    I have also been hearing for years that social security is running out of money. I understand that there are many people in America just living of social security. I have plenty of folks like that in my family. However, I don’t think that gives the full pictures since these folks also qualify for other entitlement programs to help them out. How many people die before they collect one check from social security.
    Question: If the U.S. dollars is eventually going to lose its reserve currency status, what will all the savings accomplish if it will not have the same purchasing power? What does the U.S. have to do to avoid the dire consequences that I keep reading about?

  2. I have been investing in some kind of retirement fund since my late 20’s. However my health is not the best and I am hoping to retire
    at 64. I am concerned whether or not my retirement monies combined will carry me thru age 75.(I just picked an age. Obviously I don’t know how long I will live).

  3. We have failed to effectively educate ourselves and our children on the importance of saving for retirement. Rampant consumerism has replaced common sense financial planning. I am one of the fortunate ones who learned to save and invest regularly early in life. I could see the long term benefits of ‘going without’. I skipped cable TV, expensive vacations, high priced colleges for the kids, a new car every few years and all the latest fad gadgets. While it did little to effect the quality of my family’s life, it has put me in a position to retire comfortably while most in my age group will struggle. Unfortunately, I have not been able to convince my children to follow my example and I fear for their retirements. While it’s a little late to impress on those closer to retirement on the importance of saving, we need to do more to educate our younger workers to avoid a similar fate.

  4. i retired 14 years ago at the tender age of 62.many years ago, when we were working ,our accountant told us that if you cannot pay your bill by the end of the month, you do not need it. or save up for it. so when i retired we had the house paid off and no other monthly bills other than taxes, insurance, etc. we still pay our bills off at the end of the month or when they arrive. i hate to pay interest charges. unfortunately, people nowadays believe in instant gratification and do not think about the future. we live comfortable and take a nice vacation once a year. i just bought a new car and paid cash. you do not have to be a millionaire if you plan ahead. do not depend on others to take care of you.

  5. There is no reason that govt would stop paying Social Security.The payments are in Dollars and the Fed can create any amount,govt needs.The real problem is how much the payments you get,will buy.

  6. The 1% and the majority of Wall St Bankers have stolen enough for all of the working class to retire. The wages in the US for the working class are pitifully low, with practically zero safety net and a greedy boss who is threatening to lay off workers in order to maximize profit (all hail profit…)
    Considering that the staff at Weiss Research won’t ever have to survive on the pittance of $50,000/yr, I highly doubt any of you can grok what it’s like to live like the majority of the working poor do.
    Hope you have a nice weekend sailing on your custom yacht…

  7. Several problems with the idea of Baby Boomers working forever: health may not hold up, job may be lost, and when people stay on the job forever, there are fewer job openings for the younger people.

  8. Layoffs can kill nest eggs. I was laid off from an airline IT position after 9/11, and while I’m back to 5 digits and saving again, I estimate the layoff, period without comparably paying work, and cross-county move cost me between 200k and 300k in lost savings and existing nest egg.

    It never went to zero, thankfully, but it’s set me back 15 years.

  9. I’ve been self-employed as a consultant, and managed to make most of my expenses deductable, so my earned income looks like I should get food stamps.I have passive sources of income. I am 61 and plan to start drawing social security at 62. I plan to keep working part time, to keep my expenses deductable, and invest my SS check in a solid dividend stock with div reinvestment. When/if I make 66, I hope to cash in my stocks and reimburse the govt for the SS I drew, and draw the higher amount thereafter. My accountant said I was one of the few folks he knew who could pull this off. You see any pit-falls with this plan?

  10. I am reaching the age and it’s not that I didn’t think of saving as I put money into the retirement fund at work Because it would be matched to a lower amount and giving money to Government which is Mandatory, I found that both mismanaged My money and I found found that I was so invested into to it that I couldn’t stop and lose what I already put in. Some of my colleagues in early days were Forced out because of age at 60, but it was later bumped up to 65, was how good the company was doing in the stock market. I took for granted that it would always be in business and that my 401 and my Social Security would always be there when I would need it . But one day I heard that things were bad and it seemed like a couple days latter the doors were locked . It had be hit by Corporate raiders broken up into small pieces and sold off Bankrupted my retirement was gone my Health insurance gone and I wasn’t ready to retire. In your article talks about when to apply for Social security but when you suddenly find yourself living outside your means and the bills keep coming, I found myself being told that I was a bit old to look for work in my industry, (pilot, aircraft mechanic) . I was even willing to sell everything moveto where ever to get work but finding that Thousands of people were in the same spot.as I started to sell the house move to smaller place sell the extra cars and toys quit my hobbies make our kids start helping with bills pay rent, I started to late and found that I was “1” paycheck from being Homeless. So much for the sob story ..I did it to myself I didnt pay attention to what the markets were doing and more so what my family was doing. Now I do Any work I can find just to have enough to eat and have a roof over my head.
    I often wondered why our government would think to help us learn about Old Age , in high school a class on what’s going to happen when this day comes maybe teach how to save money which I dont think is hard for people its learning to forget its there as in dont spend it if you want a new iphone !! And the government collect the SS money but maybe private industry invest it so that you’d have a garenty that you would have a certain amount for the day you retired sounds like a great idea I wish I never would have invested my money at work because you have no control over how its used and as always if there’s money involved someone is going to try and take it and not work for it and as times get harder it seems that more people and company’s are willing to steal from the unsuspecting,more scams, seems that money sometimes brings out the Bad in people and I think I will stop now .

  11. I worked all my life, even tho I was born crippled I could walk after surgery. Now fat cats think I’m a lazy bum for wanting to have my hard earned entitlement. Entitled because it is mine I earned it and paid into it, trusting a more honest govt to put it into Treasury bonds or like investment and if so would have had more than enough for all aspects of Social Security and SSI As well as Medicare/ medicaid for all. Now they want to steal it to pay for their wars. IRAs and 401K’s are just a way the fat cats who will set it up to steal from too. These spoiled rotten worshipers of the golden calf (the bull outside Wall Street) are the problem. Like addicts the more they get the more they want and like enablers Congress keeps giving it to them. I expect to die in the streets of starvation tho my life , tho exemplary is more decent than those ruing things for all.
    May they wake up before the smell of death overcomes them.

  12. One of the big problems with investing for retirement is the big losses you can incur in the market. If you are in your 20s, 30s or even 40s….you can probably handle losses like those from 2008. But what if you are 55, 60, or 65? What if 2008 comes again this year or next? Retirement investors need returns……but they cannot stand the risk of the market. Weiss needs to consider offering a much broader investment platform strategy for investors that would include a large array of diversified pieces.

  13. Hi
    think out side the box . i live in Nicaragua , have been for over 12 years live on social security only . my retirement from my good union job. got tired of paying me after ten years . so they asked for all the money back that they had payed me , but they never tried to get the money back . but believe me that will shut you up , and my bank said they would give my money back if they asked . hard to believe , but true .
    so just research a little , pack up and start your new life in a third world county .
    i live on $ 500 month and i have everything that i would have back home in calif and i am not being cheap or doing with out . i get over $ 1000 month .
    my hope is that this will help someone , just think out side the box howard113@hotmail.com

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