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Are You at Risk of Going Broke in Retirement?

Mar 26, 2018 | Peter Christensen |

Are You at Risk of Going Broke in Retirement?

It’s time for some good news when it comes to retirement and finances!

According to a recent survey by GoBankingRates on retirement-saving trends, the number of people who except to be broke when they retire (you fall into this category if you have saved up less than $10,000) fell from 55% last year to 42% this year. So, now more than half of Americans have more than $10,000 saved up.

However, considering that the estimate for out-of-pocket healthcare expenses during retirement is $275,000, $10,000 doesn’t go a long way, but it’s at least a good start. And, hopefully, the trend will continue in the positive direction. So, while it’s not great news, it’s better than the bad news we’re usually exposed to when it comes to retirement and money.

It’s time to start saving!

The amount of money different age groups have saved up for retirement can be seen below

Question: By your best estimate, how much money do you have saved for retirement?

Ages $0 Less than $10,000 $10,000

-$49,999

$50,000

-$99,999

$100,000

-$199,999

$200,000

-$299,999

$300,000 or more
18-34 18.18% 39.16% 6.69% 11.59% 8.69% 6.69% 8.99%
35-54 12.46% 24.43% 7.38% 15.35% 12.76% 10.67% 16.95%
55+ 10.56% 22.21% 5.98% 10.86% 14.64% 12.35% 23.41%

 

The numbers are from GoBankingRates, a company that connects consumers with financial products and advice. Using three Google Consumer Surveys, they polled adults across the US about their estimated retirement savings. Each survey targeted about 1,000 respondents in one age group (millennials, Generation X, and baby boomers).

Of baby boomers—the group closes to retirement age—23% have saved up at least $300,000, but way too many in that age group are trailing way behind: a third have less than $10,000 in retirement savings. In order to catch up, they will need to make retirement savings a priority. In 2018, you can contribute up to $18,500 to a 401(k), a 403(b), most 457 plans, and the Thrift Savings Plan. If you’re 50 or older, you can contribute an additional $6,000 per year to your 401(k). For traditional IRAs and Roth IRAs, the limit is $5,500 a year, with an additional $1,000 if you’re 50 or older.

Why people aren’t saving for retirement

When asked about why they weren’t saving for retirement, many respondents say they don’t earn money, have difficulties paying their bills, or had to spend their savings on an emergency. Other respondents say they simply don’t need retirement savings.

Question: Which is the main reason you do not have any retirement savings?

Ages I don’t make enough money to save I won’t need retirement savings I’m paying down debt Job doesn’t offer a plan Struggling to pay bills (rent, car, mortgage) Used money for an emergency
25-34 31.9% 10.34% 11.21% 12.93% 24.14% 9.48%
35-44 42.48% 14.16% 4.42% 11.5% 20.35% 7.08%
45-54 39.78% 13.44% 3.76% 8.06% 25.81% 9.14%
55-64 43.07% 7.66% 4.01% 8.03% 27.37% 9.85%
65+ 39.68% 9.13% 7.14% 8.33% 23.81% 11.9%

Saving for retirement is your responsibility

The lack of financial health in retirement should be a cause for national concern. We live in times where company pensions are becoming increasingly rarer, so it’s up to individuals to take responsibility for building up sufficient retirement savings. There is also some doubt about the longevity of Social Security. It was established as a safety net for Americans who have no financial support, and many are using it to maintain their lifestyle during retirement. However, experts are predicting that Social Security will be exhausted by the early 2030s. Ask us for our free guide about planning to achieve your financial goals when you are retired.