Most studies show people aren't well-prepared for retirement, but it's not all bad news
- Statistics can be a helpful way to gauge trends in retirement.
- Studies help provide perspective and can show if you’re on track—or not.
- To make sure you’re saving enough, try to max out contributions to your employer-sponsored plans and IRAs.
Retirement is a topic that regularly makes headlines, and not all of them are encouraging. It seems that at least once a week a new study or survey is released that emphasizes how woefully unprepared Americans are for retirement. At the same time, other research suggests that the retirement outlook may not be as bleak as it seems.
So what’s the truth about retirement in the U.S.? Looking at the retirement statistics can give you perspective, along with some peace of mind about whether you’re on course to meet your own retirement goals.
Gauging Retirement Readiness
Measuring how prepared workers are for retirement begins by looking at how much they’ve saved. It’s also important to take their own perceptions of how ready they are into account. Consider these numbers to see how you compare.
- The mean retirement savings of working households age 32 to 61 is $95,776, according to the Economic Policy Institute.
- 35% of workers have $100,000 or more saved for retirement. 38% have less than $10,000 saved.
- 56% of workers are currently saving money for their later years. That means nearly half of all Americans have yet to begin planning for retirement.
- Six out of 10 workers say they feel confident or somewhat confident about being able to enjoy the kind of retirement they want.
- 57% of workers say saving for retirement is their top financial priority.
- The median age workers plan to live to is 86. 39% of workers plan to reach age 90 or older, while 16% anticipate living to 100.
- 59% of workers expect their standard of living to stay the same or increase in retirement.
- 24% of pre-retirees say they’ll need $1 million or more to have a secure retirement.
- 54% of pre-retirees say they have no clue how much money they’ll need when they retire.
- 20% of workers say they’ll never be able to retire.
- Overall, Americans give themselves a “C” grade for retirement readiness.
Where Americans Are Saving for Retirement
If you’re saving for retirement, you probably know that you’ve got more than one option for investing your dollars and cents. Here’s where Americans are stashing their retirement dollars.
- 57% of workers have a retirement plan available to them through their job.
- 91% of workers who have access to a workplace retirement plan are using it to save.
- Middle-income households with access to a 401(k) have 30 times as much in retirement savings compared to workers who don’t have a plan through their employer.
- The average 401(k) balance reached $103,700 in the first quarter of 2019.
- 21% of workers still don’t contribute enough to their employer’s plan to get the company matching contribution.
- More than one-third of households owned an individual retirement account in 2017.
- 35% of households contributed to traditional IRAs, while 36% contributed to Roth IRAs. 20% contributed to more than one type of IRA, while 9% contributed to a SEP or SIMPLE IRA.
- The average IRA balance reached $100,200 in the second quarter of 2017.
- 21% of savers who have an IRA make maxing out the annual contribution limit to their plan a priority.
- 55% of Americans save for retirement with a regular savings account. 63% of millennials prefer cash to stocks or mutual funds for retirement savings.
Get Your Retirement Savings on Track
Depending on how much progress you’ve made toward your own retirement goals, you may be feeling better—or worse—about where you stand. If you’re not quite as close to your target as you’d like to be, taking a second look at your retirement plan can help you pinpoint the gaps.
Start by determining just how much you’ll need for retirement, based on your current spending and the standard of living you expect to maintain in retirement. Then look at your savings balances and how much you’re saving regularly.
Are you maxing out your employer’s plan if you have one, or, at the very least, saving enough to get the company match? If not, you’ll need to think about increasing your contributions.
If you don’t have a plan through your job, or you’re fortunate enough to max out your plan each year, you can supplement your savings with an IRA. For 2019, you can contribute up to $6,000 a year to an IRA, or $7,000 if you’re age 50 or older.
If you’re eligible to contribute to a Roth IRA, you could withdraw that money tax-free in retirement. A traditional IRA, by comparison, offers tax-deductible contributions. A financial professional can help you decide which type of IRA is better for you, and what steps you need to take next to achieve the kind of retirement savings you’re after.