Researchers are telling us that the expected retirement age for U.S. workers is rising and that people are planning on working longer, as opposed to saving more.
Researchers at Mathew Greenwald & Associates, Inc. and the Employee Benefit Research Institute reported that only 68% of U.S. workers said they or a spouse had tried to save for retirement, down from 75% in 2009. The percentage of workers who said it is reasonably possible for them to save $25 per week for retirement fell to 62%, from 66% in 2004.
That is only $100 per month or $1,200 per year. At this low rate, these workers do not plan on being retired for very long. The percentage of workers who expect to retire after age 65 increased to 36%, from 25% in 2006, and the percentage that expect to work in retirement increased to 74%, from just last year. Researchers found that workers with less than $100,000 in savings are especially nervous about retirement.
Here is a truly amazing number from this research. More than half the workers (56%) reported that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, was less than $25,000, and just 42% of the workers said they or their spouses had tried to calculate how much money they might need to save to live comfortably in retirement.
While the report did not give the income range of the people involved in the study, I find the lack of understanding and preparation for retirement shocking. As an industry involved in financial and retirement planning, we must do a better job of providing the financial literacy to guide people in these decisions and motivate them to take action. This is the purpose of the LIFE Foundation.