2012 Retirement Confidence Survey
The data would be better if some value were placed on defined benefit plans; currently it is a bit confusing how much they may help. But the $25,000 threshold is so low that no matter what being under that value is extremely bad news for anyone over 40. And failing to have saved over just $25,000 toward retirement is bad news for anyone over 30 without a defined benefit plan.
Thirty-four percent of workers report they had to dip into savings to pay for basic expenses in the past 12 months.
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Thirty-five percent of all workers think they need to accumulate at least $500,000 by the time they retire to live comfortably in retirement. Eighteen percent feel they need between $250,000 and $499,999, while 34 percent think they need to save less than $250,000 for a comfortable retirement.
Workers who have performed a retirement needs calculation are more than twice as likely as those who have not (23 percent vs. 10 percent) to expect they will need to accumulate at least $1 million before retiring.
66% of workers say their family has retirement savings and 58% say they are currently saving for retirement. These results are fairly consistent over the last few decades (the current values are in the lower ranges of results).
Nearly everyone wishes they had more money. One way to act as though you have more than you do is to borrow and spend (which is normally unwise – it can make sense for a house and in limited amounts when you are first going out on your own). Another is to ignore long term needs and just live it up today. That is a very bad personal finance strategy but one many people follow. Saving for retirement is a personal finance requirement. If you can’t save for retirement given your current income and lifestyle you need to reduce your current spending to save or increase your income and then save for retirement.
A year or two of failing to do so is acceptable. Longer stretches add more and more risk to your personal financial situation. It may not be fun to accept the responsibilities of adulthood and plan for the long term. But failing to do so is a big mistake. Determining the perfect amount to save for retirement is complicated. A reasonable retirement saving plan is not.
Saving 10% of your gross income from the time you are 25 until 65 gives you a decent ballpark estimate. Then you can adjust even 5 or 10 years as you can look at your situation. It will likely take over 10% to put you in a lifestyle similar to the one you enjoy while working. But many factors are at play. To be safer saving at 12% could be wise. If you know you want to work less than 40 years saving more could be wise. If you have a defined benefit plan (rare now, but, for example police or fire personnel often still do you can save less but you must work until you gain those benefits or you will be in extremely bad shape.
IRAs, 401(k) and 403(b) plans are a great way to save for retirement (giving you tax deferral and Roth versions of those plans are even better – assuming tax rates rise).
Related: In the USA 43% Have Less Than $10,000 in Retirement Savings – Saving for Retirement
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[…] Hunter from Curious Cat Investing and Economics Blog presents 60% % of Workers in the USA Have Less Than $25,000 in Retirement Savings, and says, “Determining the perfect amount to save for retirement is complicated. A […]
A house is an asset so it doesn’t seem completely fair not to include it as they could sell it at anytime.
It is true that the positive net value of your home is an asset. Things get tricky in trying to evaluate it though. If you sell it, you have to live somewhere.
I do agree excluding that value means you have a weaker understanding than if you know both the other assets and the net value of your primary residence. One of the things you will notice with personal finance advice is it often oversimplifies. Obviously it makes a big difference in what is an appropriate emergency fund or retirement if one person owns their house free and clear and has no property tax and someone else has a large rental payment each month.
For most retirement surveys, advice, data… they exclude primary residence. I agree it is not wise, but I do agree it is also no wise to just lump it with other assets – I think you need to have both values and keep them separate.
[…] 10% $112,000, 25% $66,000 – Looking at Data on the Value of Different College Degrees – 60% of Workers in the USA Have Less Than $25,000 in Retirement Savings – Credit Card Regulation Has Reduced Abuse By Banks August 28th, 2012 John Hunter | Leave a […]