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No Good: Only 41% Try to Make a Retirement Plan

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At Bloomberg, Suzanne Woolley writes that only 41% of workers have attempted to determine how much money they’ll need to save to retire comfortably. Of those who took a crack at figuring out how much they’d need, 37% say a million dollars or more. Take a look at my chart of the Savings Rate below. You can see that Americans are saving nearly 3% below the long term average today. You can bet most who need a million dollars aren’t anywhere near that goal today. Woolley writes:

EBRI [the Employee Benefit Research Institute] doesn’t have data on how many people actually wind up retiring with a nest egg of $1 million or more, but it does have a database of 401(k) plans that covers roughly half the market, and it shows that 10 percent of plan participants have at least $200,000 stashed away, said Craig Copeland, a senior research associate at EBRI. For people in their 60s, it’s 30 percent. Even that is a very small minority of American workers.

Many will never get near the $1 million mark without a huge savings push. Asked about their current savings, not including the value of a primary residence or a defined-benefit (old-fashioned) pension plan, only 20 percent of workers said they had saved $250,000 or more. Forty-seven percent had saved less than $25,000, and 24 percent of those people had saved less than $1,000.

I can’t stress the importance of saving early-and saving until it hurts-enough. The earlier and more you save, the stronger the power of compound interest will work for you.

Life Comes at You Fast. Slow It Down with My Friday Email. It’s Free.

Read more from Woolley here.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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