More than 42% of Americans will retire broke, according to a 2022 survey taken by GOBanking Rates. For the fifth year in a row, thousands of individuals were polled to ascertain how much the average American has set aside for retirement, and the results may shock you.
The survey found that 42% of Americans have less than $10,000 saved for retirement, which means that 42% will be broke at the time of their retirement. The average retired American, aged 65 and older, spends $46,000 per year. Those polled in the survey included around 1,000 individuals from three generations: baby boomers, Generation Xers, and millennials.
In general, Americans find it difficult to save for retirement. Blame it on overspending. Blame it on increasing healthcare and education costs, or blame it on the fact that wage gains have not increased over the past decade. Americans are working well into their 80s, and that’s not necessarily because of a deep affection for their professions. Take a look at this retirement nest egg crisis.
According to a CNBC report from April 2018, retirement preparedness varies by age, which comes as no big surprise. The Economic Policy Institute defines working-age families as those households whose income-earners are between 32 and 61 years old and declares that the median retirement savings for these families are a meager $5,000. Here is how much each generation has saved:
On April 2nd, 2019, the House considered a bill introduced into Congress as the “Setting Every Community Up for Retirement Enhancement Act,” or the SECURE Act. On April 1st, 2019, the Senate Finance Committee introduced the “Retirement Enhancement and Savings Act,” or RESA. Take a look at how these bills may help Americans save for retirement.
House Ways and Means Chairman Rep. Richard Neal (D-MA) said in an article by Yahoo Finance that this bill is “providing more and easier ways to save” by “allowing workers to actively plan for their futures and avoid falling into poverty later in life.” It has many facets to it including
Because of the SECURE Act, students’ parents are encouraged to save for future education endeavors. The Act will make it easier and cheaper to do so. Additionally, it will allow part-time employees to participate in 401(k) plans, meaning more individuals can save for retirement.
Headed by Senators Chuck Grassley (R-IA) and Ron Wyden (R-TX,) the proposed Senate bill, “The Retirement and Savings Act,” the anticipated approach to bettering retirement finances, will focus on helping Americans save more money during their prime working years. The bill will encourage them not to delay saving for retirement. RESA will ensure that those retirement nest eggs last well into retirement and are not depleted while the retiree is still alive.
RESA, much like SECURE, will improve small business retirement plans. Under the Act, employers will be able to join forces to offer and support retirement plans for their workers. Currently, many small businesses are unable to offer retirement plans or, if they can offer them, struggle to keep them afloat. What’s more, the legislation lifts the ban on IRA contributions made after an employee turns 70.5 years old. This means that 1.5 million, or 1 out of 5 Americans, still working at the age of 70.5, may continue to make their IRA contributions.
Fortunately, saving for retirement news is not all doom and gloom. There is good news for all ages. Older individuals spend less than their younger counterparts for a variety of reasons, so the costs of living tend to shrink. Resources like healthcare and social security will continue to be available to those approaching retirement and will continue to be improved upon. And, now more than ever, if the wanna-be retiree absolutely needs to work past the age he intended to retire, there are more jobs available to older Americans.
Even though the average retirement age has risen over two decades, many Americans can retire before they had planned to. And some end up staying on the job or returning to work because they find working more personally fulfilling than retirement.
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[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can view at your leisure, and each includes a comprehensive customer PowerPoint about the topic):
This is an edited version of an article originally published on June 7, 2019. It was edited by Maryan Pelland ]
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