Millions of Americans nearing their golden years are still financially unprepared for retirement. According to U.S. Census Bureau data, 50% of women and 47% of men between the ages of 55 and 66 have no retirement savings.
1 in 3 Americans has $0 saved for retirement....
Almost half (48%) of U.S. households headed by someone 55 or older have no retirement savings, according to U.S. Government Accountability Office's most recent estimates.
Nearly 2 in 5 Retirees Have No Retirement Savings
The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings.
In 2022, almost half of American households had no savings in retirement accounts, according to the Survey of Consumer Finances (SCF). These accounts include individual retirement accounts; Keogh accounts; certain employer-sponsored accounts, such as 401(k), 403(b), thrift savings accounts; and pensions.
If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.
If you are 50 with no retirement savings, it's time to do some catching up. Fortunately, individuals aged 50 or older can go beyond normal contribution limits to retirement accounts with "catch-up contributions." These contributions can significantly boost your retirement savings.
Some experts suggest planning to live on a minimum of 65 to 75% of your current income in retirement. According to these parameters, you may need 10 to 12 times your current annual salary saved by the time you retire. Experts say to have at least seven times your salary saved at age 55.
21 percent of Americans said not saving early enough for retirement was their biggest financial regret, according to a Bankrate survey.
If it seems like your paycheck disappears as quickly as it hits your bank account, you're not alone. More than 60% of Americans live paycheck to paycheck as of September 2023, according to a LendingClub report. Even people in higher income brackets are affected.
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
If you run out of money in retirement, you may need to rely on family members or government programs for financial assistance. You may also need to reduce your standard of living or make significant lifestyle changes.
57% of U.S. adults are uncomfortable with the amount of emergency savings they currently have, as of May 2023 polling. Fewer have no emergency savings. 22% of U.S. adults have no emergency savings at all, the second lowest percentage in 13 years of polling, as of May 2023 polling.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
That said, the typical age of financial independence should be between 20-23 years old, according to a Bankrate survey. Break the numbers down by cost category, and differences of opinion can be pretty wide.
With $400,000, if you buy an annuity at age 62 and then retire, you might expect monthly payments of around $2,400 for the rest of your life. This comes to about $28,800 per year in guaranteed income according to one estimate.
The rule of 55 allows penalty-free withdrawals from a 401(k) and 403(b) if you leave a job during or after the calendar year you turn age 55. This is an exception to the IRS rule that levies a 10% penalty on withdrawals from employer-sponsored retirement plans before age 59½.
Following the 4% rule, $600k could provide for at least 25 years in retirement, with an annual spending of around $24,000. However, the actual duration will be influenced by your age at retirement and your monthly spending plans.
If you retire at age 55, you probably won't be eligible to receive Social Security retirement benefits for several years or be able to withdraw money from your retirement accounts without paying a 10% early withdrawal penalty. Additionally, for most people, Medicare won't kick in for another 10 years.
It is never too late to start saving money you will use in retirement. However, the older you get, the more constraints, like wanting to retire, or required minimum distributions (RMDs), will limit your options.
Ages 45-54
The 45 to 54 age group is the first one where the percentage of people with no savings actually decreases from the age group that precedes it. But at 34 percent, there's still more than one in three respondents who have no savings and another one in four who have under $1,000 to their name.
The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920.