Wait, What? nothing saved?
I saw this article on CNBC recently and it obviously caught my attention. Having no retirement savings would scare me. We’re not extreme retirement savers by any means, but we do consistently add to our retirement accounts.
The scary thing is here’s how many Americans have nothing at all saved for retirement: nearly half! Thats according to the Economic Policy Institute (EPI).
The bottom line is balances in retirement accounts are much lower than they should be. Part of this has to do with the shift over the past 40 years by corporations from defined benefit pension plans to defined contribution plans (401(k), 403(b) and 457(b) plans). Most will argue that the 401(k) experiment has failed.
There is also a clear inequality with retirement account savings. The average savings for all families is over $95,000. Great, right? Not at all because the median savings is only $5,000. That means there is a smaller amount of families with much larger retirement savings balances brining up the average. This doesn’t surprise me though because we hear about the income gap and share of wealth between the “1%” and the rest of us.
The best thing to do is start saving for retirement early. With your very first job before your very first paycheck, make an election of at least 5% and continue to increase it over time. If you don’t get used to a larger take home paycheck then you will never miss it!
Sorry this is a short one! I really recommend reading these great articles on retirement savings:
Economic Policy Institute article “The State of American Retirement: How 401(k)s have failed most American Workers”