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Working Americans Have Almost No Retirement Savings

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CNN Money reported last week that 43% of Americans have less than $10,000 in retirement savings, which is a statistic provided by the Employee Benefit Research Institute in their Retirement Confidence Survey (2010 results). If that figure isn’t scary enough, it appears that 27% of workers have less than $1,000. Both figures are increases from 2009, when 39% had less than $10,000 and 20% had less than $1,000 a year ago.

While the statistics are sobering, it does show how much the recession has hurt a lot of people. If you lose your job, the first thing to go after your emergency fund is probably going to be your retirement savings. Keeping a roof over your head and food in your stomach is going to take precedence over retirement tomorrow.

If you dig a little deeper in the statistics, you get a little more color on the situation and it’s not a good one. 56% of workers between 25 and 34 have less than $10,000 in savings, 46% between 35-44, 38% between 45-54, and a mind boggling 29% of workers over 55 have less than ten grand in their retirement savings. (on the other side, it’s pretty amazing that 10% of workers between 25 and 34 have over $100,000 in retirement savings, so it’s not impossible, which totally blows away both my expectations and what we know about average retirement savings)

If you’re one of the ones with less than $10,000 in retirement savings, don’t despair because 43% of Americans are there with you. We’re going through some tough times now but once we get back on our feet, retirement savings has to become a priority. Social security and other entitlement programs aren’t going to be here forever. It’s only a matter of time before they are replaced as defined benefit (pension) retirement plans are being replaced with defined contribution (401k) retirement plans (Math doesn’t care which political party’s name is written on your voter card, the current system is not sustainable).

If you’re in better shape, excellent, congratulations but don’t pat yourself on the back just yet. Share your tips with your working friends so that we can come back in five years and talk about how great it was we reversed the trend. We’re not getting many incentives to save for the future, just look at CD rates if you need a reminder, but that doesn’t mean we shouldn’t do it.

43% have less than $10k for retirement [CNN Money]

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113 Responses to “Working Americans Have Almost No Retirement Savings”

  1. javi says:

    I am so glad that a wise friend told be to start saving for retirement once I got my first job out of college. Since then I have been putting a small amount into my retirement accounts. Now. I am well ahead of most people in my age group.

    • jsbrendog says:

      agreed. max out that roth ira and put whatever else into the no match 401k since i started working out of school. thank god someone was nice enough to tell me their horror stories so i didnt one day (hopefully, fingers crossed) have to have one of my own

  2. bloodbath says:

    I recommend saving as much as you can without touching the funds until retirement. Save even $35 per month if that is all you can afford.
    I started saving for retirement when the first 401k came into effect. I did not save much until about the 5th year in, then I saved the maximum for my age. I have saved enough to live in retirement for the next 25 years. I went into self-imposed retirement 6 years ago, first living off my savings then at 59 1/2 I tapped into the 401k. With Social Security benefits, rental income and my 401k withdrawals I live comfortably off about $48k per year. I could not do it without the 401k savings.
    SAVE, SAVE, SAVE!!!!!

  3. Gary says:

    This also means that the rest 60% people needs to pay for the 40% people who do not have enough saving for retirement.

    • saladdin says:

      I think that thought is a little flawed. Lots of people do survive on SS alone or work until they are 65 bringing in their own income. And of course we pay into SS so it’s not really “60% people needs to pay for 40%.”

      saladdin

  4. I honestly don’t believe in the 43% figure. I bet if you did a survey right here on this thread, the figure would be closer to 80%.

    Shall we prove the media wrong?

    • NateUVM says:

      I think you’d run into a MAJOR sampling error if you conducted such a survey on this thread. Not so sure that the readership here is really all that indicative of the nation as a whole.

      • jsbrendog says:

        exactly. someone unconcerned with saving and being smart with their money would mroe than likely not frequent let alone post on a financial blog touting awareness and financial smarts.

  5. Shirley says:

    The readership here is already interested in saving, otherwise they wouldn’t be here. That would definitely be a lop-sided survey… :-)

  6. jsbrendog says:

    thank god i have my retirement savings well above these numbers and a job. phew.

    but, if i didn’t, it wouldn’t cheer me up one bit to know that 43% of americans are right there with me. in fact it might make me more depressed

  7. Kirk says:

    I agree with almost all the suggestions above, but I want to offer an alternative scenario which might apply to mabye just a handful of people.

    For those, I think it comes down to too much choice, it’s paralyzing. People know they should save for retirement, and then there’s a million choices on how to do it. But it’s tempting to research every fund and every broker, should you get a Roth or a traditional IRA, what are ceiling figures, what happens if I over contribute, how to open an SEP or a SIMPLE plan, 401 what? Chuck, T.Rowe price, Vanguard, Fidelity, my bank… everybody’s offering something. It’s basically like the jam test. Too much choice.

    I know some people who refuse to open an IRA because they haven’t had the time to find the right one. So they have none. They forgo the company match (which is a 100% interest right there), while they’re figuring out if they should invest in a fund that might lose 30% of it’s value in these hard times… Let’s see, you give $100, your company gives $100, the fund loses $60, and you still come out ahead by $40. But people are paralyzed out of fear of making the wrong choice. Not realizing that doing nothing is actually the worst choice you can make.

    Advice, do something today, you can always change it tomorrow. But just start, it’ll add up and compound in your favor.

  8. Wow, that is pretty amazing. I am not surprised about the under $10,000 for younger workers since many people in that age range either have lots of bills or don’t care about saving. I would imagine that most people that have the $100,000 are in their 30′s.

  9. Since I’ve been laid off several times in the past 12 years (and now on disability) and barely 31, its a little hard to save when you’re constantly in a state of emergency and have to use those emergency funds. I guess ill be working until I take my last breath if this keeps up!

  10. TheArabicStudent says:

    I’m 23 and no one I work with saves their money. I’m wondering if the people with $10k or less saved even think about retirement. Retirement is synonymous with being old and so a lot of people don’t want to think about it. I was this way a few years ago. I reasoned that when I got to be 60 then I’d be too old to have any fun with money so I might as well spend while I’m young. I’m guessing that’s what my peers think too. Then I realized that retirement doesn’t have to be something you do when you’re 60+. You can stop working as soon as you get enough money. That realization really encouraged me to save money like crazy because I REALLY hate working.

  11. Zach says:

    Well, I’m 25 and have about 3k in a Roth IRA and another 17k in a regular brokerage account. So I guess, I am kinda doing better then most in my age group? I have about 4k in a high yield savings account/interest checking.

    Like many, I also have a love for travelling. I just spent a year living in Sweden and now just moved to NYC (orig from Bay Area) and with the cost of living here, barely able to put a little money away. Right now saving and retirement is taking a back burner to life and I will just try and grow what I have already saved. Besides I still have to make my way to Australia for a year before I turn 30!! Working Holiday Visa anyone?

    For the most part these statistics didn’t surprise me, except for the 10% with more than 100k. Basically 1/10 Americans between 25-34 have more than 100k in retirement accounts, etc..? That seems like a stretch to me.

  12. Kim says:

    The 25-34 years old category is interesting. While I am 30 & have $100k it is largely from an inheritance. I saved $30k of my earnings but then spent it on a grad degree. To get to $100k you’d have to forgo kids & a house, I don’t see any other way.

  13. Betty says:

    Interesting information. I have become more concerned about retirement income the as I approach retirement age. I’ve always wanted to start a business and it seems that now is a good time as it can sustain me when I retire. I picked up a book called “The Ultimate Boomer Business Launch Workbook” by Jeff Williams. It’s helping me do my homework before I get started and plan for the future.

  14. Jim says:

    I started contributing to my company 401K when I started my professional career 20 years ago. At 45, I feel my retirement is well funded, I’ve also saved a lot in taxes. I’ve always taken advan=tage of the maximum my employer would match or contribute towards. Why let free money go. I think Jim’s right, it comes down to how you were raised, individual personalities and simple knowledge. Try to teach your kids as they grow up while you can influence them.

  15. eric says:

    I think one of the most sobering facts that came out of this Great Recession is the lack of savings Americans have. It’s absolutely horrid and so that’s why it was encouraging to see the national savings rate increase steadily rather than be negative a few years ago. I hope the trend stays though.

  16. The good news is that as the stock market dropped over the last few years stocks have become very cheap. If you put the same amount in you 401k you are gettting allot more shares for your money. As the market continues to recover over the next 3 to 5 yrs it will amplify you gains because you have allot more shares making you money because you were smart enough to inverst while the market was down. As long as you have another 10 or 20 yrs to go this bad recession will be the best thing to ever happen to you.

    • Roberto says:

      15-20-30 years seams like a long time, but if you are lucky you will still be around to enjoy what you saved when you were young. I did just like you and saved in a 401k with the company I worked for for 31years. I retired at 50 and now I am going to reach my 60th birthday. Even though I got hit pretty bad with this reccession my 401k just kicked in (59.5 years old)and I am not worried at all.
      I may not be rich but I know I will survive. Forget about a job at my age, nobody wants us, so CYA, noone else will. One more thing to add, get a roof over your head (or several properties) and have it paid off by the time you want to hang up your spikes. gives you more $$$ in your pocket to enjoy. No mortgage or rent just property taxes and insurance. Good luck !!

  17. I save 10% of my pay in my 401K tax deferred and what is better is my company matches the first 5% that I put in. If you have a company match it is a no brainer put that much in!!

  18. Kasia says:

    I am 27 and just hit roughly $110K in my retirement accounts. It’s possible, but it takes some sacrifice. I am divorced (luckily, this didn’t hurt me too badly, we didn’t have any serious assets accumulated during marriage), no kids, no house (never bought one), never bought a new car, no CC debt. I got a good job working for the feds (been promoted every year, had two employer-funded moves though) and have been setting aside 15% from right when I graduated college. (Now maxing out the Roth & TSP (401K equivalent for feds) and trying to save $$ for a down payment…I have never bought new furniture unless it came from IKEA. Half of my stuff came from Goodwill or Craigslist. I drive a 1991 S10 Blazer. Don’t get me wrong, being married to someone somewhat financially irresponsible didn’t help me, and I do spend money on things sometimes (I have 2 cats, travel a lot, every couple weeks buy some new shoes or something) so I don’t see myself as very extreme, but I do have very clear priorities and savings is a big one. I’d rather save $5000 then spend $5000 in car payments and depreciation, but drive something newer. It hasn’t broken down yet in 2 yrs! (But I have had to dump some money into it for repairs…. and it’s inconvenient… half the time they don’t even make the parts for the thing anymore)

    Like I said…. doable… but you have to choose it.

    • Shannon says:

      Wow! I’m so inspired! I am 21 and have been saving 10% of my income since i was 15 and don’t even have close to 10k, let alone 100K. You much be really doing something right! I’m about to finish college and want to know if you have any advice for me as far as what else i can to increase savings. A priority for me is definitely saving and i really don’t spend a lot as it is. Any advice for me?

  19. helena says:

    It definitely takes frugality to buy a house, pay off loans, send kids to college and have enough left over to retire. However, if everyone led the life of frugality our whole economy would tank, since it’s foundation depends on people demanding products they really can’t afford. Now that people in the US are saving a bit more, corporations are praying that Chinese citizens (who were pretty good savers by necessity) will loosen their purse strings and buy products they cannot really afford. At some point when consumers are tapped out, the whole system will collapse. Multi-generational living may be the wave of the future (or a repeat of the past).

  20. rock says:

    Nobody ever taught me about a retirement account. My grandfather worked for the government, so he got an amazing pension! He got more money than most because he was the Chief of Defense, at one time. Obviously, his wife, who was my grandmother, got a generous pension as well even after he passed away. Not once did they ever tell me to save for retirement. Well, I had no idea until one day I started to read about it online, so I started a Roth IRA. I’m so glad I did. I’m going to take the money they left me and invest it in no-load mutual funds. I’m really glad that I took the time to research information about how others are planning for their retirements. I don’t know many people who actually have enough money in a retirement account, except for a few older family members who are either ready to retire in a few years, or a few old-timers on my husband’s side who knew about this. Funny, he never talked bout it, either. A lot of people are going to be in for a rude awakening when they get older if they don’t save. I can’t understand why nobody I know of is really doing this. I will take other people’s stuff and sell it on eBay, take a percentage and put it in my retirement account. I’m planning on buying a new home, and we’re going to get a guest home and rent it out and use the money for our Roth IRA. I think even if times are tight, you can still come up with creative ways to save. If you can rent out a room in your house, take other people’s stuff and sell it on ebay, what have you got to lose. I even babysit other people’s pets at home to make extra money. I know I have a long way to go before retirement, but I really would rather start now, than wait until it’s ultimately too late to reach any long-term retirement goals. I think that’s the key: “goals.” How many people have a long-term retirement goal? Goals somehow differentiate between that haves and the have-nots! Who actually sets goals and sets out to achieve their goals?

  21. Siculari says:

    I think credit card is to blame in most situation here. It encourages people to spend beyond their means

  22. Rockyboy says:

    Retirement never crossed my mind before(Im 28).I began thinking about retirement barely 5 years ago when my father ran into financial troubles. He decided to build a house from scratch by demolishing the old one he previously aquired for 65 k. He took a line of credit and a loan of aprox 147 k and when he ran out of money he turned to credit cards: another 30k something plus. Then he lost it all and went bankrupt. Now hes 60 years old with no savings, no retirement, no house and nothing to his name exept for an old 1998 dodge 1500.

    Prior to that, he would buy expensive furniture, tvs and of course the cars. At that time my world was school and nothing else. I managed to get credit, and spent all my savings (about 5000) in a saltwater aquarium hobby that was a total waste of money. The aquarium got demolished along with the house and right then and there I understood how important is to be wise about spending. Most of the things we buy loose value over time and we dont even care about them later. Started to save money again which I used to pay for my bachelors. Then, started saving for retirement and for emergencies which I am using now becauase I have not been aboe to find a job. Thanks to the fact that I saved seriosly now I can survive.

  23. thomas says:

    Well, I am middle aged and I cannot retire. I do have some money saved from a 401k, over 100,000. But if anyone thinks 100,000 dollars is enough money to retire on, you had better do your math, because it is not enough. To have a good retirement and if it is your only means for retirement not including a pension, you would need at least 750,000.00 or more depending on lifestyle. Insurance, rent, car payments, food cost of living increases will eat you alive. I have just started saving a few years back, and it has taken a while to get what I have now, but I don’t have enough and I feel sad for those who have worked so long and have very little if any retirement savings. My heart goes out to you and shame on companies who are outsourcing there workers jobs overseas only to make those poor Americans lose there lively hood. You should be ashamed of yourself and consider yourself un American.

  24. pantoum says:

    This is all helpful if one is making the assumption that no major political/social changes happen within the next 10,20,30 years. Given the relative instability of the last decade, it is not unreasonable to wonder if the american dollar could indeed collapse. If something like that were to occur, savings/401k would be reduced to a fraction of previous value. . . just like during the “crisis” of 2008. Just think of the historical timeline throughout american history, there hasn’t been many long stretches of time that would allow a person to save over a liftime without the impact of major political/financial upheaval. For the most part, it has been intense social programs that helped people as they trasitioned through stages of financial development.

  25. John says:

    There is a new reality of retirement that is not being discussed in the public domain with two tenants: 1.retirement as we know it no longer exists for most Americans. 2. If we are not going to retire, we need to be doing something we better damn well enjoy. The new retirement age will be 70 and the average lifespan of an American male is 76, we need to start doing those things now that we were waiting until retirement. This is much too much work for 6 years of watching AFV and gardening. The-R-Word.Net – John


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