Tag Archives: median retirement savings

The average age of retirement for Americans is 66, according to a Gallup poll, up from age 60 in the 1990s. With Americans living an average of 78.7 years, that means a good 12 or more years in retirement.

If you want to keep living at or near the lifestyle you had when you were working, experts say you need between $500,000 and $1 million saved in order to finance your retirement years. That hefty chunk of change requires years to save up.

Below are six problems with the state of retirement in America:

1. According to a TransAmerica Center survey, although 77% of American workers are saving for retirement through employer-sponsored retirement plans as well as other options, 33% of workers are without any real retirement savings plan.
2. Of the 77% of Americans who have retirement plans, many just don’t have enough saved to actually fund their post-retirement life at the same level as their working years. The median retirement savings of Americans between ages 55 and 64 was just over $107,000, according to a 2017 report from the Government Accountability Office (GAO). While this amount may sound significant, $107,000 translates into a $310 monthly payment, and only if it’s invested in an inflation-protected annuity.
3. Gender gap: Men have over 3 times more retirement savings than women. Women’s average total retirement savings is just $23,000, whereas men’s average total retirement savings is over three times higher at $76,000. (CNBC)
4. We can’t count on Social Security to fund our post-retirement life because Social Security is only guaranteed to be funded through 2035, according to Business Insider, after which time it may only be three-quarters funded. That means that (a) People already taking money from it may see a drop in payments; and (b) New retirees may have trouble getting any money at all. Part of the reason for this is an increase in older adults. By 2035, the number of Americans 65 and older will increase from about 56 million today to more than 78 million. Thus, more people will be pulling money from the total fund, but fewer people will be paying into it.
5. There’s a 70% chance that an American age 65 or older will need long-term care at some point, according to the U.S. Department of Health and Human Services, but Medicare does not cover the costs of assisted living and nursing homes:
   1. The median cost per month for an assisted living facility is $4,051.
   2. The median cost per month for a nursing home is even higher: $8,000.
   3. The above costs don’t include other healthcare costs. This is why many older adults opt for long-term care insurance in their 60s.
6. There’s a growing trend of Americans who are dipping into their retirement funds early. The TD Ameritrade survey showed that 44% of Americans ages 40 to 79 have taken money out of a retirement plan, including as many as 53% of Americans 70 to 79. Doing so comes with financial penalties, so financial experts advise against this.

Source of the above: GoBankingRates

According to Personal Capital’s 2021 data (CNBC):

• The top 5 states with the highest retirement balances are:

• The bottom 5 states with the lowest retirement balances are:

What you can and should do to ensure a secure retirement, which is what people who become millionaires do (MarketWatch; CNBC):

1. Delay gratification: The key to saving is your ability to postpone gratification. Do you really need that item or vacation?
2. Get debt free, especially high-interest debts like unpaid credit balances.
3. Begin saving as early as possible. The median age U.S. workers begin saving for retirement is 27. That means half of Americans begin saving when they’re 27 or older.
4. Pay yourself first: Put money into a “Do Not Touch” Saving account before you have the chance to spend it. Conventional wisdom says to set aside 3 to 6 months’ worth of living expenses in an emergency fund, but you should save at least 20% of your gross income each month. Even putting aside $20 per week into a savings account gives you more financial independence over time.
5. Max out tax-efficient retirement funds like IRAs and 401(k).

See also “Cost of assisted living by state”.

~E