According to a PwC report, one in four Americans have nothing, zero, zilch, nada in retirement savings and those who are saving, are simply not saving enough for their futures.
The report finds that the median retirement balance for 55-to-64-year-olds is only $120,000. Over a 15 year period, this amounts to less than $1,000 per month to live off of, which dwindles even more depending on life expectancy.
Shockingly, among those in the over 60 age demographic, 13% have absolutely no retirement savings.
For 45-59-year-olds, this level increases to 17%. Among 30 to 44-year-olds some 26% are salting funds away for that retirement future, while 42% of 18 to 29-year-olds are being proactive.
It is positive to see that the younger generations are better financially educated enough to recognize that in this modern day and age, there is no better advocate for your financial future then the woman or man in the mirror.
Coupled with this overall lack of sufficient retirement saving, is the impending dilemma of the Social Security fund’s depletion by 2035.
Bernadette Geis, U.S. asset manager and wealth management leader at PwC, says, “Those that are saving, on average, what they have saved will afford them $1,000 a month of actual cash while in retirement.”
One of the reasons for the lack of saving is there are not cost-efficient and affordable plans available for small businesses as the expenses for employer-sponsored retirement plans have increased.
To alleviate this, Geis suggests having widespread adoption of multi-employer defined contribution plans for small business employees.
Furthermore, more needs to be done to educate and incentivize people on the benefits of participating in an available retirement plan, including implementing more technology into the industry to showcase the benefits of personal finance and saving money.
Retirement accounts with tech notifications and alerts can serve as a reminder to look at balances, update asset allocation, etc.
“If providers and 401(k) record keepers could adapt to this new technology, and push more out plan participants, forcing engagement, that certainly could give rise to saving, too,” Geis said.