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Retirement Savings Article

April 3rd, 2019 at 04:23 pm

The GAO has released a report on the rate of retirement savings at the request of Bernie Sanders. It's still shocking to me no matter how many times I read pretty much the same thing.

https://www.gao.gov/assets/700/697898.pdf

The numbers don't quite match up, I calculated 101% with the percentage breakdown. Savings rates have slightly improved, but still, what is to be done? More personal finance education for children? Is it a lack of education or a lack of income? Probably both. When you consider that this survey is for Americans 55 and older, the picture gets even scarier.

Posted in Retirement readings, Savings stories, Personal Finance, Retirement, Saving Money | 4 Comments »

4 Responses to “Retirement Savings Article”

  1. creditcardfree Says:
    April 3rd, 2019 at 05:02 pm 1554310967
    1554310967

    There's even a Saver's credit to incentivize lower income earners to save for retirement. Maybe that should be promoted more. There are so many factors involved. We can definitely implicate government in some of the problems, such as allowing subprime lenders and payday loans outlets to exist. We can implicate the welfare program that ends a full check as soon as you earn $1 more than the limit. In that case, there should be gradual reduction of financial benefits as you earn more. People don't' want to be on the welfare system, but as soon as they go over the current limit of earned income, they lose all benefits.

  2. disneysteve Says:
    April 3rd, 2019 at 10:26 pm 1554330401
    1554330401

    The 101% is likely just a rounding error. It says 48% have no retirement savings but then breaks that down into 2 categories that total 49%.

    Honestly, I don't think the numbers are as bad as they try to make them appear. About 71% have either retirement savings, a pension, or both. And the portion with retirement savings has actually gone up 4% in just 3 years. If 29% will be living on SS alone, that's right around where it always has been.

    They also don't detail what they count as retirement savings. I know from other studies I've seen that they may only count actual retirement accounts like 401k or 403b or IRA. They may not count money held in regular accounts. My wife and I currently have a little over $500,000 in non-retirement accounts which likely wouldn't show up in this survey (and she is 55 and I will be soon).

    I certainly agree that most people aren't saving enough, but I also think the "official" numbers don't tell the whole story.

  3. terri77 Says:
    April 5th, 2019 at 12:22 am 1554423760
    1554423760

    How common is it for people to having savings, but none in retirement accounts? I would imagine that’s not very common. And with the way companies are cutting pensions, it doesn’t seem a safe bet to rely on them. I almost feel like my pension & SS shouldn’t even be considered.

  4. disneysteve Says:
    April 5th, 2019 at 07:31 pm 1554492710
    1554492710

    "How common is it for people to having savings, but none in retirement accounts?" I don't have any stats handy but I would suspect it's pretty common. Only about half of all workers have access to a 401k, for example. I didn't have one until a couple of years ago and I'm 54 years old. That's a big part of why we have 500K in non-retirement accounts. Other than an IRA/ROTH, I didn't have a retirement account available to me.

    A lot of people don't know or understand or trust the stock market so they "invest" in bank accounts and CDs and savings bonds and crappy things like whole life insurance policies. Or they own businesses and plow their money into those. Or they own a lot of investment real estate. I know many people who are multi-millionaires and don't have a penny in traditional retirement accounts.

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