Encourage your children to save, no matter what their age.

Updated: Sep 1, 2018

I strongly believe that we are heading into another financial crisis which could be even worse than the last. Baby boomers are aging and most do not have nearly enough saved for retirement. 

The National Institute on Retirement Security released a new report on the current state of retirement savings in America. The study confirms the need for greater retirement savings access, particularly, the need for an Automatic IRA program. According to the report, there is a widespread lack retirement savings in the U.S. Specifically, 38 million working-age households (45%) do not own any retirement account assets. While experts estimate that, in order to replace 85% of pre-retirement income, families must save 8 to 11 times their annual income, 80% of all working people ages 25-64 have less than 1 times their annual income in retirement savings. For all households, those who do and do not have retirement accounts, the median retirement account balance is $3,000, and just $12,000 for those nearing retirement. Americans need to save an additional estimated $6.8 to $14 trillion in order to be financially secure in retirement. We cannot rely on social security to be our major source of income, we must act now to ensure our own financial security. 

With the average 401(k) balance for 65 year olds estimated at $25,000 by independent experts – $100,000 if you believe the retirement planning industry - the decades many elders will spend in forced or elected “retirement” will be grim. Teresa Ghilarducci, a professor of economics at the <a>New School</a> for Social Research, <a>estimates that 75% of Americans nearing retirement in 2010 had less than $30,000 in their retirement accounts.</a>)

Our national demographics, coupled with indisputable glaringly insufficient retirement savings and human physiology, suggest that a catastrophic outcome for at least a significant percentage of our elderly population is inevitable. The signs of the coming retirement crisis are all around you. Who’s bagging your groceries: a young high school kid or an older “retiree” who had to go back to work to supplement his income or qualify for health insurance?

For some people unfortunately it may already be too late to recover. At this point the best thing we can do is to educate and encourage everyone around us no matter how young to be more financially responsible. To start saving for their future at an early age and how to handle their debt responsibly. 

Below are some statistics on saving and retirement.

  1. Only 42% of private sector workers age 25 to 64 have any pension coverage in their current job. That's lower than the 50% who had pension coverage back in 1979.(Source: Center for Retirement Research)

  2. 30% of workers in a 2012 study reported that they had less than $1,000 in savings and investments. (Source: Employee Benefit Research Institute)

  3. A 65-year-old couple retiring in 2012 is estimated to need $240,000 to cover medical expenses throughout retirement. (Source: Fidelity Investments)

  4. Just 14% of American workers are very confident they will have enough money to live comfortably in retirement. (Source: Employee Benefit Research Institute)

  5. Only 16% of American workers are very confident that their investments will grow in value. (Source: Employee Benefit Research Institute)

  6. Half of current retirees surveyed say they left the work force unexpectedly as a result of health problems, disability, or getting laid off. If you think you'll just "work forever" instead of planning for retirement, you may want to think again. (Source: Employee Benefit Research Institute)

  7. For a low earner retiring at 62 -- Social Security replaces 40% of pre-retirement earnings. This is unlikely to provide for a comfortable retirement. (Source: Employee Benefit Research Institute)

  8. Nearly 75% of retirees have not saved enough and said they would save more if they could do it all over again. (Source: Health and Retirement Study)

  9. More than one-third of all households end up with no employee-sponsored retirement plan at all during their entire work lives and others, who move in and out of coverage, end up with inadequate 401(k) balances. (Source: Center for Retirement Research)

  10. At age 65 and above, Social Security benefits provide more income than any other source for over 60% of households, regardless of marital status. With an average monthly benefit of $1,230 for retired workers, this indicates that a lot of retirees must be struggling. (Source: Health and Retirement Study)

  11. One-third of households end up entirely dependent on Social Security; for low earners that portion is 75%. (Source: Center for Retirement Research)

  12. 21% of workers covered by 401(k) plans choose not to participate. (Source: Center for Retirement Research)

  13. A typical worker should accumulate about $363,000 by the time he or she retires. According to the Fed, a typical household approaching retirement had 401(k)/IRA balances of only $120,000 in 2010, far short of the projected amount for the individual.(Source: Center for Retirement Research)

  14. In 2002, the mean household wealth of married couples reporting excellent health was approximately three times that of married couples reporting poor health (an average of $500,000 compared with $164,000). (Source: Health and Retirement Study)

  15. Average household net worth was $31,000 when both partners were in poor health but more than $400,000 when in excellent health. (Source: Health and Retirement Study).

  16. 60% of workers report that their total household savings and investments, excluding the value of their home and any defined benefit pension, is less than $25,000. (Source: Employee Benefit Research Institute)

  17. 56% of workers report that they have not attempted to calculate how much money they will need to have saved for a comfortable retirement. (Source: Employee Benefit Research Institute)




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