Surveys show that most Americans are not ready for retirement.
A new survey released by the American Association of Retired Persons (AARP) finds that a majority of Americans are worried they won’t have enough money to live comfortably in retirement. Specifically, the survey found that 61% of Americans are concerned that they will not have enough saved to support themselves in retirement.
Meanwhile, 40% of men and 30% of women feel they are on the right track. But, especially for men, confidence has been eroded. 42% of men said their financial situation was fair or poor, up from 34% at the start of 2022.
Perhaps the most surprising statistics from the survey are that 20% of Americans in their 50s have no retirement savings, and 26% of those who are not yet retired have no intention of doing so.
Inflation takes a big hit
The biggest reason that prevents Americans from saving and investing is inflation.
“Every adult in America deserves to retire with dignity and financial security. But too many people lack access to retirement savings options, which, combined with high inflation, makes it increasingly difficult for people to choose when to retire,” said Indira Venkateswaran, senior vice president of research at AARP. “Everyday expenses continue to be the biggest obstacle to saving more for retirement, and some older Americans say they never look forward to retirement.”
By that point, 70% of Americans are worried that prices are rising faster than their income. Additionally, 37% were worried about basic costs such as food and housing costs, and 26% were worried about nursing costs.
Additionally, many people are having trouble paying off their credit cards, let alone saving for retirement. The survey found that 30% of seniors have credit card balances of more than $10,000, and 12% have more than $20,000. The latter is up from 8% roughly a year ago.
However, about 33% of respondents hope their finances will improve 12 months from now, which may be linked to hopes that inflation is trending lower.
About 57 million people do not have a retirement plan at work.
Another major barrier for Americans is lack of access to retirement savings vehicles, such as 401(k) plans. AARP says Americans are 15 times more likely to save for retirement when they have a work plan.
But about 57 million people don’t have access to a retirement plan at work, and AARP is working to do something about it.
“America is facing a serious retirement crisis. “AARP has long supported legislation to expand access to retirement savings, but Congress must act more quickly to provide older Americans with the financial support they need and deserve,” said AARP’s senior vice president and president. said Nancy LeaMond, Chief Advocacy and Engagement Officer.
Several bills are currently pending in Congress to address this issue. One of them is the Retirement Savings for Americans Act of 2023, which provides retirement savings accounts to eligible full-time and part-time workers without an employer-sponsored retirement plan.
Another option is the Automatic IRA Act of 2024. The proposal would require employers with 10 or more employees who do not sponsor a retirement plan to automatically enroll their employees in an Individual Retirement Account (IRA) or other automatic contribution plan, such as a 401(k). Small employers may be able to take an automatic IRA tax deduction to offset the cost.
Auto-IRA programs are already available in eight states: California, Colorado, Connecticut, Illinois, Maine, Maryland, Oregon, and Virginia. Massachusetts also offers multi-employer plans. Additionally, 10 other states are in various stages of implementation.
“We worked with 19 states to create programs that make it easier for people whose employers don’t offer retirement plans to save for the future. But in about two-thirds of states, no action has yet been taken and we await action. From the federal government,” LeaMond said.
