Retirement savings and preparation are areas where many Americans seem to face challenges. So many people fail to save for retirement at all, let alone save any substantial amount that can actually support them through the last chapters of their lives. We therefore see people working into their 70s, 80s, or even indefinitely.
We’ve compiled a few retirement statistics from the Federal Reserve Board, Gallup, and other resources that shed light on the gravity of the retirement situation in America.
1. In spite of available 401(k) plans, around one-third of Americans have no retirement savings. Many employers offer 401(k) plans. According to the American Benefits Council, nearly 80% of full-time workers have access to employer-sponsored retirement plans. But, in spite of these offerings, 31% of non-retired respondents in a Federal Reserve report say they have no retirement savings or pension at all, including 19% of people near the retirement age.
2. Too many Americans rely only on Social Security. Gallup recently asked Americans about their 401(k) plans. The research site found that 89% of workers who have 401(k) plans available opt to participate in them.
Therefore, with 80% of workers having these plans available and nearly 90% participating, we’d think that the vast majority of American workers would have built up substantial funds for retirement.
But surprisingly, a shocking one-third (35%) of Americans over the age of 65 rely completely on Social Security as their primary source of income. And 63% of people who begin working at age 25 end up being financially dependent either on Social Security or on friends, family, and charity.
3. Around one in five people tap into their 401(k). Many workers have built up at least some retirement funds. One major problem, however, is that when something comes up and an investor needs money for some reason or another, some choose to take it out of the 401(k). Gallup found that overall, more than 20% of investors have tapped into their 401(k) accounts — 9% have withdrawn from their 401(k) accounts early, and 16% have taken out a loan from their accounts.
4. Some retirement funds are still feeling the sting of the Recession. The recent recession had a severe impact on retirement funds, as we all know. Overall, 60% of people said they might have to delay their retirement because of losses during the recession, according to Statista.
Even though America has for the most part recovered — unemployment has lowered back down to below 6%, and the stock market has improved, the website Governing found that many plans (40%) have yet to reach their pre-recession peaks.
5. Young people know they should save, but many of them have other financial responsibilities that are higher on their lists of priorities. Saving for retirement as early as possible provides a worker with the safest and best possible retirement scenario — the more time you allow your money to grow, the more interest compounds. In spite of this commonly known fact, almost half of millennials are not saving for retirement, according to a Wells Fargo survey. That same survey also found that 8 in 10 millennials say the Recession taught them they need to save now in order to survive potential economic problems down the road.