36% of all Americans have less than $1,000 saved for retirement

[crisi]

Im not sure but I was essentially a stay at home parent for many many years just working part time (with no no 401k). But we made it a huge priority to invest heavily in my DH's retirement. We are in our late 30's and have a wonderful amount saved and now I work in a job where I have my own 401k again. Now ask me about college savings for my kids and thats a whole other story! We chose our retirement over huge college funds.

And, unless you got out of high school or college and never worked outside the home - just went straight into SAHMdom- its very possible to have managed $1000 before you became a stay at home mom.

And right choice - if you can only afford to save for one, retirement is the better choice.

 

[imsayin]

For those that have a life of nothing but rainy days - and yes, there are some of those people - yeah, life sucks. But that isn't the bulk of the 36% that has saved nothing or near nothing for retirement. The bulk of those people are putting off today what they think they can do tomorrow. They are putting data plans on their cell phones and have cable TV.

I would love to know what percentage of people that aren't saving truly fall into the category of truly not having enough money to cover their living expenses.

I think most people could be saving more for retirement. Too many people think they can't go without: Smart phones, cable tv, eating out, expensive vacations, expensive cars, etc. The list is endless.

 

[mefordis]

The more frightening aspect is that I know people in their 40s who have less than $100,000 in their retirement accounts. And they think that is significant.

That's more frightening than having $0 saved?

 

[pryncess527]

The news is a little better than the headline -- the 36% who said they have less than $1,000 saved were talking about retirement OTHER THAN defined benefit plans, so some of those, particularly the 25% in the 55+ group, may have pensions that weren't included.

Of course, it's highly unlikely that anyone in the 25-34 group, or even the 35-44 group, would have a pension, since those aren't common anymore.

Another stat of interest (to me at least) was that 54% of the people who are NOT saving for retirement, admitted they COULD be putting away $20 per week

For anyone interested, you can read the report fact sheets here:
http://www.ebri.org/surveys/rcs/2014/

 

[CalDisneyMomof2]

And, unless you got out of high school or college and never worked outside the home - just went straight into SAHMdom- its very possible to have managed $1000 before you became a stay at home mom.

And right choice - if you can only afford to save for one, retirement is the better choice.

A lot of women in my mom's generation including my mom have essentially been SAHM's since out of high school minus a few jobs here and there that would have made it difficult to save $1000 30+ years ago. That's why I ask. That could be a significant part of the percentage.

I personally at 27 have significantly more than $1000 as does my husband. My 35 year old husband also has a pension. Our home will be paid off before we retire (if all goes as planned). It's incredibly unfortunate that my generation and even those that are older don't have means to contribute to a retirement plan.

 

[MrsPete]

Does that 36% include stay at home parents?

Doesn't matter. Whether you work or not, you need to save for retirement. If you choose to stay home, you need to have a plan of some sort.

And like losing weight, there are some people who are at a REAL disadvantage - they have Hashimotos or some other hormonal issue that makes losing weight MUCH harder - for savings - they have very small incomes, have more than their fair share of setbacks (spend time ill or have ill relatives, face something like Katrina), and started life with a bad hand (grew up in poverty, didn't get the benefits of a good education or people who believed in them).

True, saving is easier for the people who have a big income, or the people who have no children, or the people who have no health problems . . . but that doesn't mean it's impossible for people who have challenges.

I've been quite upfront about how much my DH and I try to save, both on this board and in real life. At one point, it was 40% of our income, and we only crossed over $100k in income once, the year before I started working part-time and had our second child. We are in our late 30s and have a nice savings built up for retirement and college for the kids.

Yes, it's very possible -- if you've avoided debt and chosen to live a frugal lifestyle.

That's more frightening than having $0 saved?

It's more scary because a 20-something who hasn't started saving still has time on his side, whereas a 40-something with only $1000 can't count on the magic of compound interest.

Here's an example, which I pulled from the internet to illustrate the point:

Start saving as much as you can, as soon as you can. The earlier you start, the longer compounding can work for you. For example, a 20 year old who saves $200 a month until age 65 and earns exactly 6% on saved funds annually would have accumulated around $550,000. But a 40 year old contributing the same amount each month at the same earnings rate would have accumulated only $138,600 by age 65.

The news is a little better than the headline -- the 36% who said they have less than $1,000 saved were talking about retirement OTHER THAN defined benefit plans, so some of those, particularly the 25% in the 55+ group, may have pensions that weren't included.

Now that's true. The Baby Boomers largely have pensions. A person with a solid pension, Social Security, and a paid-for house will be perfectly comfortable. Since pensions have always tended to accompany relatively low-paying jobs, a person in that situation probably wouldn't be able to fly to Hawaii every year or buy a new car every time the whim strikes, but that person won't be forced to choose between medicine and food.

However, before you wail the demise of pensions, be sure you realize that they're a two-edged sword: To earn a pension that will actually support yourself in retirement, you typically must stay with the same company for 30+ years. That's not particularly attractive to young people today, and it's downright tough for two-career families (if one spouse is transferred, while the other needs to stay put for the pension). And since none of us know how long we'll live, none of us know really know whether we'll come out winners or losers in the pension game.

 

[Colleen27]

Im not sure but I was essentially a stay at home parent for many many years just working part time (with no no 401k). But we made it a huge priority to invest heavily in my DH's retirement. We are in our late 30's and have a wonderful amount saved and now I work in a job where I have my own 401k again. Now ask me about college savings for my kids and thats a whole other story! We chose our retirement over huge college funds.

I'll bet that's something that factors in too - I know a lot of people who are saving more for college than retirement, even though it goes against all financial logic, because they believe that higher education without loans is the only way their kids will have a better life than they've had. They're willing to work until they can't work any more and forego a enjoyable retirement to give their children that start.

We don't have nearly enough saved and I'll admit it is because it just isn't our top priority. If we gave up vacationing, sent the kids to public school, and banked the savings we'd have a long-shot chance of getting to what most financial planners say we need for retirement (the magic million dollar mark, a seriously overwhelming number for those of us in median-income land). We're not willing to embrace that level of austerity through our "family" years.

 

[bettymae1121]

I would love to know what percentage of people that aren't saving truly fall into the category of truly not having enough money to cover their living expenses.

I think most people could be saving more for retirement. Too many people think they can't go without: Smart phones, cable tv, eating out, expensive vacations, expensive cars, etc. The list is endless.

But isn't that kind of like the "people on food stamps buy steak and lobster" argument? By that I mean saying that people can't save because they have flat screen tvs and yearly cruises, is much the same that poverty threads devolve into "if they just worked harder and got rid of their iPhones they'd be fine". It's usually just not that simple.

I'd imagine that for most people, it's somewhere in between the extremes of "not having a spare nickel to spend because you'd starve otherwise" and "if they just give up the annual Disney Vacation and HBO they'd have $500k in a 401k by now". Could they cut back some and save more? For most, yes. And clearly something is better than nothing.

But a lot of folks 30-55 are being squeezed from both ends and the middle. Student loans of their own, college savings for their kids (optional yes, but most parents want to at least help with future college costs), current expenses that go up while salaries are stagnant, and possibly helping a parent or in-law because their retirement nest egg didn't go far enough or the pension fund went belly up. Telling such a person that just cutting out that $5 latte and they'd be just hunky-dory, well I just think it's more complex than that, is all.

 

[rdevine10]

I'll bet that's something that factors in too - I know a lot of people who are saving more for college than retirement, even though it goes against all financial logic, because they believe that higher education without loans is the only way their kids will have a better life than they've had. They're willing to work until they can't work any more and forego a enjoyable retirement to give their children that start.

We don't have nearly enough saved and I'll admit it is because it just isn't our top priority. If we gave up vacationing, sent the kids to private school, and banked the savings we'd have a long-shot chance of getting to what most financial planners say we need for retirement (the magic million dollar mark, a seriously overwhelming number for those of us in median-income land). We're not willing to embrace that level of austerity through our "family" years.

I guess I just wanted to add we do have a plan for paying for college. I still only work part time and I will probably for several more years. I anticipate a nice salary jump when I do go back full time, the majority of that difference will go to pay for college expenses. I do not want my kids walking away from college with loans, BUT, I have also set the bar at a reasonable level, with no grande ideas of expensive schools or possibly even being a commuter student to the local (and pretty good state school I graduated from). Sure, we could fund the colleges a bit more if I gave up vacationing, but, no one knows how long we will be around and I want to make those memories while I can. (And we can afford to without any debt).

 

[crisi]

But isn't that kind of like the "people on food stamps buy steak and lobster" argument? By that I mean saying that people can't save because they have flat screen tvs and yearly cruises, is much the same that poverty threads devolve into "if they just worked harder and got rid of their iPhones they'd be fine". It's usually just not that simple.

I'd imagine that for most people, it's somewhere in between the extremes of "not having a spare nickel to spend because you'd starve otherwise" and "if they just give up the annual Disney Vacation and HBO they'd have $500k in a 401k by now". Could they cut back some and save more? For most, yes. And clearly something is better than nothing.

But a lot of folks 30-55 are being squeezed from both ends and the middle. Student loans of their own, college savings for their kids (optional yes, but most parents want to at least help with future college costs), current expenses that go up while salaries are stagnant, and possibly helping a parent or in-law because their retirement nest egg didn't go far enough or the pension fund went belly up. Telling such a person that just cutting out that $5 latte and they'd be just hunky-dory, well I just think it's more complex than that, is all.

Except we aren't talking about having saved $500k - we are talking about not having saved even $1000. For a very few people, that IS out of reach. But it isn't out of reach for 36% of Americans. 54% of which ADMIT they could find $20 a WEEK to save - or could reach that $1000 threshold in a mere year.

 

[AquaDame]

10% of our pay goes into retirement funds - IRAs and 401Ks - we don't even see it, so we can't spend it. Ideally we will be bumping that up once we have more of our mortgage paid off. My husband also technically has a pension (but we doubt it will be there when he actually retires since they are already gunning to get it out of their contract).

36%? That's surprising but then again 16% of us are living in poverty with no choice in the matter... so I really shouldn't be. Once again, I'm very, very, very lucky. >_<

 

[crisi]

10% of our pay goes into retirement funds - IRAs and 401Ks - we don't even see it, so we can't spend it. Ideally we will be bumping that up once we have more of our mortgage paid off. My husband also technically has a pension (but we doubt it will be there when he actually retires since they are already gunning to get it out of their contract).

36%? That's surprising but then again 16% of us are living in poverty with no choice in the matter... so I really shouldn't be. Once again, I'm very, very, very lucky. >_<

Though the 16% is at any given time. And while there are certainly people who live in poverty their whole lives - there are many people who move in and out of the poverty level during the course of their lives.

I spent four years as an adult being part of the poverty statistics - I was an independent from my parents college student in my own apartment.

My husband spent the first three or four years post college below the poverty level.

 

[fbb]

The more frightening aspect is that I know people in their 40s who have less than $100,000 in their retirement accounts. And they think that is significant.

Maybe my tunnel vision is peculiar, but I know the financial/retirement situations of zero people I know or have ever met in my life.

Nor does anyone know mine, nor has it ever come up in a conversation.

 

[runwad]

DD is still in college but is working part time and is allowed to contribute to a 401K through the company. DH and I convinced her to put 10% of her income into the 401K now while she doesn't necessarily 'need' the money. One day when she does have bills she might not be able to contribute as much but whatever she's putting in now will keep growing.

We are trying to help her learn from our mistakes. DH and I have a nice amount in our 401K's but if we had started earlier well.....

^ This is what more of us need to be doing, passing on this financial knowledge to our children to help them get the best start in life. When I got my first job I saved 6% of my pay because that got me the full company match, then every year when I got a raise I bumped it up 1%. I've been working 26 years and for the past 13 years I've been part time. I never made over 30k yet I have 6 figures saved in my 401k. There have been years that I wasn't able to bump up my contribution so I'm only saving 17% of my pay. Buth thru the magic of compounding and saving early I've been able to save a tidy sum. I am also eligible for a small pension that will suplement my savings in retirement.

And since I did start early while still living at home and having no expenses, the years that I did take off saving because of "life" didn't hurt me too much. More parents need to educate their children on the benefits of saving early.

 

[crisi]

^ This is what more of us need to be doing, passing on this financial knowledge to our children to help them get the best start in life. When I got my first job I saved 6% of my pay because that got me the full company match, then every year when I got a raise I bumped it up 1%. I've been working 26 years and for the past 13 years I've been part time. I never made over 30k yet I have 6 figures saved in my 401k. There have been years that I wasn't able to bump up my contribution so I'm only saving 17% of my pay. Buth thru the magic of compounding and saving early I've been able to save a tidy sum. I am also eligible for a small pension that will suplement my savings in retirement.

A number of years ago, my husband and I reached the point where our annual gains from the market in our 401ks (except, of course in crash years) exceeded our contributions. Compounded interest (and gains - in this case its really gains) becomes this money machine.

 

[nluvwithdisney]

I am all for saving for retirement. However there is a balance to also being able to do things that you might want to now as well. MIL retired early and had funds put away for that. Less than a year after that she was diagnosed with cancer went into remission a few years and came back. I felt bad because she saved so much and then wasn't able to enjoy retirement. She passed away earlier this year. I want to be able to enjoy life now as well as in my retirement years. You just don't know what can happen.

 

[crisi]

I am all for saving for retirement. However there is a balance to also being able to do things that you might want to now as well. MIL retired early and had funds put away for that. Less than a year after that she was diagnosed with cancer went into remission a few years and came back. I felt bad because she saved so much and then wasn't able to enjoy retirement. She passed away earlier this year. I want to be able to enjoy life now as well as in my retirement years. You just don't know what can happen.

Of course, but you also don't want to be my mother in law - who is 75 years old and lives off her small social security check and the money we give her. She can't afford to go visit her sister in Arizona (nor can her sister visit her) unless we (or her sister's daughter) buys plane tickets.

 

[disykat]

A lot of it depends on your financial personality, not just your income.

I've been a saver since I was a little girl. I've always had money. When my siblings spent the 10 cents they earned sweeping the neighbor's porch, I saved mine. When I was living on my own with a low paying job I found roommates to save money, then got another job on the weekends to build myself a cushion in savings.

I happily skip vacations (as much as I love them) to avoid my kids having college debt, I also don't vacation without a safety cushion in savings. It's just built in to me.

My older son is the exact same way, my younger son - not so much!

I've definitely tried to teach my kids long term savings from a very early age - like I was. I've watched my nieces and nephews struggle financially because they never learned how to save. When they were little, savings meant saving up for the next toy they could spend all their money on. The idea of having money just sit there was an anomaly to them. I think it is to many people.

Not all the people with no savings are scraping by paycheck to paycheck because they simply can't afford more. Many of them choose to have no savings because they prefer to spend their money.

 

[runwad]

Nor do you want to be like a relative of mine who's husband just got laid off after 20 years with a company and he's 56 and she's 57. Hardly anything in retirement savings because they helped their kids with college and weddings and figured they'd save later. Ya the job prospects for a 56 yr old with no college education and not a valuable skill are pretty dismal. He'll probably only make 1/2 his past income. Now my relative is sorry they didn't save more instead of helping the kids so much. You may say you're just going to work forever, well good luck with that, most companies do show you the door once you start getting up there in salary level because they can hire someone younger for half your pay. So saving later doesn't always work out.

 

[QVCshopper]

I am all for saving for retirement. However there is a balance to also being able to do things that you might want to now as well. MIL retired early and had funds put away for that. Less than a year after that she was diagnosed with cancer went into remission a few years and came back. I felt bad because she saved so much and then wasn't able to enjoy retirement. She passed away earlier this year. I want to be able to enjoy life now as well as in my retirement years. You just don't know what can happen.

Who said we didn't live for now? I might not spend much on a day to day basis (like my mall trip today: 2 free calendars from Hallmark, Groupon for Jamba Juice, and Frozen Blu-Ray for $11) but we travel a lot and go to tons of places. In fact, my kids have done far more than many of their peers and even more than my in-laws who have lived in this area for 65 years. But, my clothing isn't all that--and I buy most of the kids clothes used.

Life is basically picking and choosing where you do and do not want to spend your money. There are basics to cover, but after that, it's up to the individual.

And I wish people would talk about this more. Maybe then more people would save. There's such a stigma and shame with talking about money, and I don't know why. My own sister won't come to me for advice with house hunting and saving for a down payment--I think because she doesn't want to cut back in the areas I'd tell her to.