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Average American has just $955 saved for retirement, study finds (www.the-independent.com)
submitted 9 months ago by to c/news@lemmy.world
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Most workers who aren’t saving for retirement through their employers aren’t saving at all, the study found

New data suggests the average American worker has under $1,000 saved for retirement.

A report from the National Institute on Retirement Security found that the median savings for all employed adults between the ages of 21 and 64 were approximately $955. The study includes workers with 401(k) and other retirement savings plans, as well as the approximately 56 million workers who do not have access to employer-sponsored retirement plans.

Workers with retirement savings plans have a median balance of approximately $40,000 saved, according to the report. That figure is nowhere near the $1.5 million that Americans say they need to feel comfortable fully retiring.

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[–] 87 points 9 months ago (13 children)

I'm sure the situation is dire, but I'm not sure it communicates an accurate picture by lumping in 21 year olds with people who've been in the workforce for decades.

21 yr olds who are just entering the workforce or are in college aren't expected to have much, if any, retirement savings at that stage in their lives.

A better picture would be to break it down by age group. Still not a pretty picture, I'm sure.

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  • [+] 54 points 9 months ago (4 children)
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  • [–] 6 points 9 months ago (2 children)

    I didn't start having meaningful savings until my mid 20s. When i bought a house paying off the mortgage became a priority over saving for retirement. I'll be better off paying less interest and reducing my expenses faster than I would be collecting interest on that money. In theory i could out perform my mortgage interest rate by trading stocks, but that is a lot riskier than paying off the mortgage.

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  • [–] 4 points 9 months ago* (last edited 9 months ago) (1 child)

    Trading stocks is probably the worst investment strategy any normal person with a market-unrelated job and life responsibilities could pursue, with almost guaranteed losses in the long term. Good on you for identifying the high risk early in life- never forget it. That being said, there's very strong arguments for investing in stocks, but do it the boring way: large blended ETFs with a low expense ratio (like VTI, VTV, VOO, VXUS, or the Boglehead favorite: VT) or mutual funds. Don't "trade," buy and hold and try to forget you even have a brokerage account housing those blended, diversified funds. Try to use tax-advantaged vehicles as much as possible, like a Roth IRA or a Roth option in a 401k. Your mortgage APR is what? 4-7%? The market should definitely outperform that in the long term, and you can reduce your exposure to acute transient shifts even more by dollar cost averaging into your savings. I'm all for paying off debt as quickly as possible, for the psychological benefit, but there's also the rate race of your investment's probable APY vs your debt's APR.

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  • [–] 1 point 9 months ago

    I've been diversifying into some long term stock options in some of my savings accounts. I live quite frugally so I am able to still save a bit while paying a bit extra to my mortgage. So far I've done pretty good in the markets but my trading accounts aren't significant sums of money, when they do well I sometimes wish I invested more but when a stock is down bad I'm reminded why I keep those sums low.

    People underestimate what even $50 a month can do over time. Sure it might not be down payment money but it could be enough to build a safety net so you can try a new job or move somewhere else with a bit more behind you.

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  • [–] 3 points 9 months ago (1 child)

    This is still a shockingly low number. If you graduate with a bachelors and get a job our of college and contribute to a 401k, you should easily hit 1k saved within a year. If you didn't go to college and started working at 18, you'll be making less, but should still be able to save 1k by 22. Even shitty employers have retirement programs, it's just that most hourly workers won't take the time to sign up. There's only one way the median can be 1k, and that's because at least 40% have $0 saved and the whole system is completely broken for them.

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  • [–] 2 points 9 months ago

    This also seriously depends on the employer. One of the first things that gets slashed during benefit cuts is reitrement accounts, because they're an easy target and you're not "losing" the money.

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  • [–] 2 points 9 months ago (2 children)

    Wouldn't surprise me at all if the average retirement savings of those in their 50s is like $100,000

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