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The Shockingly Low Amount of Retirement Savings per American
October 18-24 (this week) was recently designated as ‘National Save for Retirement’ week by Congress. Historically, the federal government has always promoted increased spending by consumers to drive us out of recessions. That’s why it’s incredibly interesting that during the largest recession since the Great Depression, Congress would approve of a ‘National Save for Retirement’ week.
Average Retirement Savings per American
It turns out that they have good reason. According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53% of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household (headed by a 43 year old) has just over $18,000 in savings! That’s a scary number.
With pension plans being a thing of the past, saving for your own retirement is increasingly important. The government is starting to realize that if it doesn’t begin encouraging savings now, the expense of completely supporting tens of millions of retirees who have zero retirement savings will be catastrophic for the country. Now is the time for action.
These statistics get me absolutely fired up! My employer has a 401K match of 50% of my contributions up to the IRS maximum 401K contribution. That is an incredible benefit that I would never take for granted. However, a number of my colleagues don’t take advantage of this free cash while having no home, no kids, and no major expenses. If they aren’t taking advantage of this benefit, it’s easy to see why workers who aren’t getting a nice match are not saving at all. It kind of makes me sick on behalf of their future self looking back with regret.
I have the feeling that a good many of you are exceptions to these statistics. But why? How are most Americans not getting the message?
Retirement Savings Discussion:
- How much have you saved for retirement and what is your age?
- Why have you decided to save?
- If you could tell peers of yours why they should start saving, what would you say?
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My name is G.E. Miller and 
I’m 21, in the military. I have about 2,000 in a Roth IRA. then 10,000 between a mutual fund account and stocks. i strive to save 70% of my income while i can. i hope to have 100,000 by the time i get out of the military.
Ryan, You are off to a great start. Continue to invest in a low cost Stock Index fund (Vanguard, Fidelity, T Rowe) and by the time you retire at 42 years old you will be able to live comfortably for the rest of your life (like me). Now just watch your back for the next 20 years, and don’t take any unnecessary risks with your health. Thanks for your service.
Well, I highly doubt ill do 20 years in the service. I plan on getting my A n P License so I can work on Civilian Air liners. Its a good job for now. I make good money for not having a bachelors degree. I am scheduled to leave the service in two years from now, almost to the day. I haven’t decided if I want to extend or re-enlist.
I invest through vanguard. By the and of this year, If all goes as planned I should hit my goal of 25K. I just struggle with where to put my money. Any advice? I don’t mean stock choices, I mean should I hire a broker? I know very little about the market.
I think I worry more about money than anyone I know.
Ryan, Forget the brokers, they are in business for themselves not you. Do your own homework. If you are already with Vanguard stay with them, it’s a good company. There is little advantage to individual stocks, but if you have to, as another poster said, stick with those that pay dividends Walmart, Verizon, Etc.. again do your homework.. Long term what will make you money are benchmark index mutual funds. Your asset allocation is the part you should be concentrating on not which individual funds. Get comfortable with (for your age) 80%-90% in (Equity) S&P500 Index or Total Stock Market Index and 10%-20% in (Bond) Total Bond Fund, all found at Vanguard. Find the funds that cost you least which will allow more of your money to work for you, that’s the bottom line. Use automatic draft to pay yourself first and you won’t even miss the money after a while. You will be amazed at how fast your money will compound. Best of luck to you.
Hi Ryan, You are doing well for your age. Keep investing in 401K, Roth IRA, and look at dividend paying stocks. If you take some money and invest in a IRA thru. Fidelity, you can use all of their tools, which are really good at helping you plan for retirement, and make wise investment choices. You need about 100K for a CFP to look at and manage your investments for free. Until then, I would use the free tools provided by Fidelity or Etrade.
“You need about 100K for a CFP to look at and manage your investments for free.”
…wait, something smells funny here. There’s no such thing as a free lunch. How does this make sense as a service to investors? I’ve never heard of a free CFP. That might be me assuming something can’t exist and therefore not looking around to see that it does exist, of course. Where are these free CFPs? Can you point out a few online or something?
(And if I’m pulling out cliches, “You get what you pay for” also comes to mind.)
This was copied from the Vanguard site. Maybe this was what the poster was referring to.
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Investors with $50,000 to $500,000 in Vanguard mutual funds and ETFs
* Commission-free Vanguard ETF® trades and reduced commissions for stocks and non-Vanguard ETFs. No account service fees.*
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Voyager Select Services®
Voyager Select Services offers special savings and sound advice to help you plan for continued success.
Investors with $500,000 to $1 million in Vanguard mutual funds and ETFs
* Sophisticated support from representatives who can answer your more complex investment questions.
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* “Ask a CFP® professional” program for guidance on particular financial issues as they arise. For long-range planning, a complimentary financial plan by a CFP professional that analyzes your investments and saving strategy.
When you have a significant amount of assets in your portfolio you can get more investment services provided without charge. Most CFP’s charge an upfront fee. If you meet liquid net asset requirements some organizations waive fees. I pay nothing for consultations with CFP, Of course some of the products that CFP recommends have some sort of commission structure, which is how the CFP gets paid. You have the ability to choose what products fit best for your financial goals. You get reviews of your portfolio and consultations quarterly included.
I’m 23 and have had a full time job since August of 2010. Currently I have 19k in my 401k and I just purchased a home with my fiancee. I have contributed 15% of my salary since the day I was hired and I get 5% matched on top of that. I hope to have 100k by 30!