The American retirement crisis in numbers – The Fool Motley

Nowadays, the huge debt on student loans and the uncertain future of social security solvency have caught the eye, but another equally serious financial crisis is looming over the world. horizon for millions of Americans. Thousands of people retire every day and many do not have the savings to last a lifetime.

When everything is dry, they will have to rely on their family members to support them or ask the government for help to cover their basic living expenses. It's a fate that thousands of Americans are already living in, and according to data from Northwestern Mutual Planning & Progress's latest survey, tens of thousands more will join them in the coming decades.

Statistics say everything

While respondents to the 2019 Northwestern Mutual survey reported better money management skills than those surveyed 10 years ago, the outlook for many of their futures remains bleak. The investigation revealed:

• 22% of Americans saved less than $ 5,000 for retirement.
• 15% have no savings for retirement.
• 56% do not know how much money they need to take a comfortable retirement.
• Forty-one percent do not take steps to avoid retirement savings, although many see it as a possibility.

The percentage of Americans with less than $ 5,000 in retirement savings actually decreased compared to last year, but 22% remains an alarming number of people without adequate savings.

The study focused on Baby Boomers and Generation X – the next two generations for retirement – and the results showed that both groups had work to do. Of the 10,000 baby boomers who reach the age of 65 every day, 17% have less than $ 5,000 in retirement savings and 20% under $ 5,000 in personal savings. outside a retirement account.

These numbers are even higher for Generation X: 21% have less than $ 5,000 in retirement savings and 22% have less than $ 5,000 in personal savings. They have more time before retirement. It is therefore possible that they can further increase their savings before. But if they have less than $ 5,000 today, it is unlikely that they can save enough before retirement.

Many know that their savings will not be reduced in retirement and therefore plan to extend their stay on the job market. About 46% of those surveyed said they expect to work after the age of 65 and 18% of them plan to work until they are 74 years old. This could help them catch up, but an unexpected health problem or family problem could make this job impossible.

How to protect your future financial security

For baby boomers and X-generators with no or little retirement savings, there are no easy solutions. Working longer is an option, but you can not rely on that to justify neglecting your retirement savings because you do not know how long you can work. A study by the Center for Retirement Research found that 37% of retirees had been forced to retire before being ready for health, employment or family reasons. If this happens to you, you may have to leave the labor market, whether you are ready or not.

Create a retirement plan if you have not yet evaluated the number of years of your retirement and multiplied by the estimated amount of your estimated annual living expenses, adding 3% per year for the year. inflation. A retirement calculator can do this part. Then subtract any money you hope to receive from other sources, such as Social Security, to determine what you need to save yourself. You can estimate your social security benefit by creating a my Social Security account.

Unless you need every dollar you earn to cover your basic living expenses, contribute at least enough to your retirement accounts to get the 401 (k) match offered by your employer. This eases the burden of saving for retirement. But you may have to put even more aside to reach your retirement goal.

Freeing up money is not always easy, but you must give priority to saving for retirement, even if it means giving up on other more enjoyable activities. Limit your discretionary purchases, cancel subscriptions you do not use and consider reducing the size of your home to reduce your current expenses or consider moving to a region or state where the cost of living is lower. You can also start hurrying to earn more money. Put your tax refunds and end – of – year bonuses on your retirement as well.

When you reach retirement, consider assistance programs for low-income seniors to reduce your costs of living. Government and non-profit organizations help low-income families pay for meals, shelter costs, health care, and so on. Do not wait until the last minute to explore these options. If you qualify, take advantage immediately to maximize your savings.

The future is bleak for many American retirees and adult workers. It may be too late for some of them to save enough for the retirement of their dreams, but with a little planning and a frugal mindset, you may still be able to secure a retirement.