New Stats, Old Story

Jonathan Clements  |  April 6, 2016

DISCUSSING AMERICA’S retirement readiness is almost always dispiriting. A minority are in good shape, but most folks are just muddling along—and many aren’t even managing that. Here are some numbers from the Employee Benefit Research Institute’s 2016 Retirement Confidence Survey:

  • 26% of workers say they have $100,000 or more in savings, excluding their home and any defined benefit pension. But the same percentage—26%—say they have less than $1,000. The picture is cheerier if you look at workers age 55 and older, but not that much cheerier: 45% report $100,000 or more in savings, but an alarming 17% have less than $1,000. Keep in mind that even $100,000 will generate just $4,000 in first-year retirement income, assuming a 4% withdrawal rate.
  • Among workers currently contributing to a 401(k) or similar employer retirement plan, 23% say they have taken out a loan. Paying off debt and buying a home were the top two reasons cited. What happened to their plan balance when they left their last employer? The EBRI study found that 25% of workers spent the money or used it to pay down debt.
  • Our expectations, it seems, are a tad optimistic. For instance, workers plan to retire at age 65, on average. But many are forced to leave the workforce earlier than expected, so the actual retirement age is 62. Similarly, among workers, 67% expect to work for pay once they’re retired, but only 27% of retirees report doing so. And don’t assume retirement will be cheap: 38% of retirees say their expenses in retirement have turned out to be higher than expected, while just 21% say their cost of living has proven to be lower.
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