According to a survey by the Insured Retirement Institute, most workers over the age of 40 do not have enough retirement savings and do not reserve enough to catch up.
Despite the nest egg deficit, many still expect to retire early and believe they will have ample income to retire.
More than half of older Americans have less than $ 50,000 to retire. But most do not increase the savings to increase the nest eggs.
Nearly six out of ten workers save less than 10% of their income and a third allocate less than 5%, according to the survey.
In addition, many have unrealistic plans, with 46% planning to leave the workforce at age 65 or earlier and workers ’expectations about future income do not match current savings.
More than half of workers believe they will need more than $ 55,000 a year and a third expect to need more than $ 75,000, according to survey responses.
“It’s something we see pretty consistently whenever we research the preparation for retirement of American workers,” said Frank O’Connor, vice president of research and outreach at the Insured Retirement Institute.
While the survey does not examine the reasons for workers ‘attitudes, seeing that their parents’ stable retirement (which may include pension income) can distort their views, O’Connor said.
This is a pretty perfect storm quite badly for a lot of people.
Frank O’Connor
Vice President of Research and Dissemination at the Insured Retirement Institute
While 67% of private industry employees have retirement plans provided by the company, workers are less and less likely to have access to a pension, according to the Bureau of Labor and Statistics.
Since most current workers cannot rely on a pension, workers must prioritize savings and may have to delay Social Security to get higher payments, O’Connor said. But the survey shows that many employees do not take this approach.
“This is a pretty perfect storm in a pretty bad way for a lot of people,” he said.
If someone expects to retire early or wants to earn specific income in their retirement, they may consider working with a financial advisor to restrict the numbers, he said.
In addition, workers can soon get estimates from 401 (k) plan providers that show their estimated monthly income from their nest egg, which can be a “wake-up call for many people,” O’Connor said.
In the meantime, someone can connect their savings to an online retirement calculator for an approximate indicator. However, some calculators can be overly simplistic, as they do not take into account long-term care costs and other factors, he said.
Still, seeing estimates, such as projected retirement income, may motivate some workers to make savings, O’Connor said.
“There are a lot of people in this studio who still have a lot of time to generate savings,” he added.
The 2021 Senior Worker Preparedness for Retirement Report is based on an online survey of 990 U.S. respondents aged 40 to 73 who worked part-time or full-time in March 2021. results reflect the responses of all age cohorts.