GoBankingRates is out with their annual survey on retirement readiness. They reported that ONLY 42% expect to “retire” broke, which is down from 55% last year. However, retiring broke means that you’ve saved less than $10,000. Really? That is the metric that we should use to measure the preparedness of our workforce?
Did you know that adults 65 and older spend about $46,000 / year? Did you also know that the average Senior Citizen spends approximately $275,000 in out-of-pocket health care expenditures? Saving $10,000 for retirement will buy you less than 3 months of average annual expenses while covering less than 4% of your likely out-of-pocket medical expenditures.
Yes, those closest to retirement (aged 55-years-old and up) are doing better than the younger generations, but not by much. Roughly 23% have saved more than $300,000, but another 33% have saved $10,000 or less. My gosh!
At KCS, we continue to believe that the lack of wage growth is impacting a worker’s ability to save more than an employee’s need for immediate gratification, as many in the media would like us to believe. GoBankingRates asked the roughly 3,000 participants to indicate why they aren’t saving enough for retirement. Their answers shouldn’t surprise anyone.
Seventy-nine percent of the survey responders indicated that they either don’t make enough, are currently struggling to cover basic living expenses, are paying down debt, or had to use “retirement” funds for an emergency. Only 10% blame their employer for not offering a plan, while the remaining 11% said that they don’t need to save for retirement – must be nice, unless they are planning for an early demise!
The loss of employer-sponsored defined benefit pension plans is placing a tremendous burden on the average American family, and it will only get worse as the remaining DB plans get shuttered. If a 9-year long equity bull market (happy anniversary) can’t positively impact the retirement savings of our workforce, what happens when we invariably have another bear market.