When it comes to retirement and money, we usually hear mostly bad news. But a recent survey on retirement saving trends serves up a bit of good news.
The number of people who expect to retire “broke”, meaning they have less than $10,000 saved for retirement fell, to 42% from 55% last year, according to a survey by GoBankingRates. This also means that more than half of Americans have more than $10,000 saved for retirement. Now, knowing that estimates for out-of-pocket health care in costs in retirement are around $275,000 and climbing, having $10,000 saved up isn’t exactly comforting, but assuming the savers have awhile to go before retirement, it’s a start. (Look, we said it was good news, not great news.)
For older folks, low retirement balances are more dire. Adults 65 and older spend almost $46,000 a year, on average, according to the Bureau of Labor Statistics, so $10,000 in savings isn’t going to last very long.
This is how the numbers break down:
Here’s their methodology: GoBankingRates, which connects consumers with financial products and advice, polled adults across the U.S. using three Google Consumer Surveys to find out how much the average American has saved for retirement. Each survey targeted a specific age group — millennials, Generation X and baby boomers — and included about 1,000 respondents per group. Each age group was asked to estimate how much they had saved for retirement.
Of adults 55 and over, the group closest to retirement age, 23% have saved $300,000 or more. But far too many of the respondents in that age group are way behind. Roughly a third have less than $10,000 saved. This group needs to make retirement savings a priority. Retirement savers can contribute a maximum of $18,500 to a 401(k), 403(b), most 457 plans and the Thrift Savings Plan in 2018. People 50 and older are allowed to make an additional $6,000 in “catch-up contributions” per year to their 401(k). Contribution limits for traditional and Roth IRA plans are $5,500 a year, with catch-up contributions of $1,000 for those 50 and over.
The reason most people gave for not saving for retirement? Many say they don’t earn enough, are struggling to pay bills or used their money for an emergency, while others say they don’t need retirement savings.
Financial health in retirement is a national cause for concern. Company pensions are increasingly rare, putting the burden of building a nest egg on individuals. And Social Security isn’t all that secure either. The program was created as a safety net for Americans who had no financial support, and now many use it to maintain their lifestyle in retirement. Experts say the Social Security system will be exhausted by the early 2030s.
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