Most Americans Aren't Prepared for Retirement

With the baby-boom generation set to retire and both political parties discussing cuts to the traditional social insurance safety net, it is especially important for workers to think about and plan for retirement. It turns out, though, they’re doing the exact opposite — 57% of workers set to retire in the next ten years have yet to even think about the steps they need to take financially before retirement. These shocking statistics come from a recent report put out by Financial Finesse, which details the lack of preparedness most Americans bring towards their retirement planning.

Though there are several reasons why this might be the case, Financial Finesse’s CEO Liz Davidson points to dwindling private pensions as one of the main reasons why so many are unprepared: ”employees have a much bigger savings burden now than they did even a generation ago when traditional pension plans and full retiree health care coverage were much more common… they need to fund benefits once funded by their employer but they are not adapting at the same rate that this transition is happening.”

That explanation dovetails with previous research done by the Wall Street Journal, showing that the average American about to retire is unlikely to have sufficient resources. For those with pensions, Americans fall (on average) $3,892 short annually on their retirement; for those without pensions, that number balloons to $30,392 annually. Indeed, 49% of retirees rely predominantly on Social Security, with 1/4 of the population relying on it for more than 90% of their income.

Though all of these numbers seem dire (and confusing!), there are a lot of personal and policy-based options to improve people’s retirement accounts. Financial Finesse’s Davidson urges people about to retire who have not yet planned financially to begin saving immediately to get something into their accounts. Senator Max Baucus suggested today at a Finance Committee meeting that employers should make tax-incentived retirement plans more available to employees of small businesses. Reuters reports that another potential fix could be to offer public pensions to employees of businesses that do not have robust 401k plans.

All of these reports, though, underscore the centrality of Social Security in providing needed income to retirees. With several high profile presidential candidates bandying about what the best ways to cut the program are, it is important to remember that millions of retirees rely on it exclusively. For those who have not planned enough for retirement — a majority of the country — it will provide a crucial buffer from poverty in old age. Indeed, Social Security is not a “monstrous lie,” but a highly effective government program that improves the quality of life for millions of Americans.

Related Articles:

Obama: It’s Not Class Warfare, It’s Math

US Poverty Rates Soar. Can We Tax The Rich Now?

Families Forced to Choose: Retirement or College?

Photo credit: Fabricator of Useless Articles' Flickr stream.

quick poll

vote now!

Loading poll...

no!
leaning no
leaning yes
yes!

no!
leaning no
leaning yes
yes!

Disclaimer: The views expressed above are solely those of the author and may not reflect those of
Care2, Inc., its employees or advertisers.

Carole R.

7:38PM PDT on Oct 1, 2011

Preparing for retirement is extremely hard when you can barely plan for tomorrow

send a green star

Gloria M.

1:30PM PDT on Sep 26, 2011

Thanks for the article.

Mike C.

2:17PM PDT on Sep 25, 2011

Patrick, you make your choices and I'll make mine, I'm very happy with mine, if I make a bad one I don't whin blaming others, I move on and correct. Setting goals and working toward those goals. One can learn something from any one and every one if one has an open mind or blow them off.

Patrick F.

4:10PM PDT on Sep 24, 2011

Mike C., I didn't quit my job to turn to a life of crime, I said I would if it came down to one of two choices so it isn't FACT, just Republican double speak. This is not just an live example, you have posted this before and it still reeks of a person who made his "fortune" on the backs of others not a self made man.

3:57PM PDT on Sep 24, 2011

The sex comment was the fact Patrick quit his job and turned to a life of crime.Just having a little fun with him.
I'm not tooting my horn, I'm giving you a live example of why people do not have to be dependent on the government.
Your father is a wise man and passing it along to you makes him a hero. My son learned well, is a slesmen in the IT area and like you is not dependent on either the government or me.
We live in a great country where you can be what you want to be, choices are you's to make.

In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other.

-- Voltaire (1764)

3:21PM PDT on Sep 24, 2011

Mike C. You would have been correct if you stopped after your fifth word. Doesn't your arm get sore always patting yourself on the back? Didn't you ever break a bone falling off your pedestal or falling out of your ivory tower? Just like self-righteous people who had a big hand helping them get to where they are, you claim to have done everything on their own, that is NOT where self-righteous clowns like you come from. People who truly do everything on their own actually become more humble. As far as education goes to make a better salary, it costs money, money that a lot of people don't have or do you put absolute strangers through school too? I am sure your wife isn't working 3 or 4 low paying jobs to put herself through school either.

If expressing my opinion is whining then what do you call your self-righteous name calling...I call it crap spewing out of a horse's ass. Don't worry, your taxes will NEVER support me, I live in Canada. I expect to be working until I am 90 and that's fine with me, my retirement fund is my ability to think and do, they are the only things that I can count on.

Evelyn J.

1:05PM PDT on Sep 24, 2011

Mike, man, I actually more or less agree with you, but why resort to low blows (the sex comment)? I'm about half your age, and what amazes me is that through 4 years of AP classes in HS, a higher end college education, and grad school, I wasn't exposed to ten minutes of solid financial advice. Thank heavens I got it from my dad. He was originally in finance, but switched to teaching, where he made much, much less money. Nonetheless he did exactly as you suggest, putting away $20, $40, money that could be saved by using coupons, and eating at subway instead of a nicer lunch once in a while. When he retired after over 30 years in teaching, he bought a couple cheap 4-plexes with this savings to supplement his extremely paltry state retirement. Though he's been retired for about 5 years, he's just about to start on SS now. I'm always amazed when my friends or acquaintances talk about how it's no use to save $20, so why bother. Any savings done diligently is well worth it.

11:35AM PDT on Sep 24, 2011

well Patrick I don't know what skills you have but you should thank me for working and paying taxes as on day you'll be living off the state for 10 to 20 years and the only sex you'll have is when you drop the soap in the shower.
My brother and I shared a bedroom in a 2 bedroom house and we worked for everything we have, worked my way through college, majored in accounting and I don't work for slave wages and neither do my friends. I referee on the weekends, make $50 for 3 games on a Sat. morning and yes I invest that money. Tomorrow I teach the referee course and get paid $180 and love every minute of it. My wife is back in school after 22 years as a para-legal and will be an RN next year and she will not be making slave wages.
you made choices and blame the government and corporations rather than your own choices.Typical whining democrat.

10:39AM PDT on Sep 24, 2011

If my country expected me to work for slave wages to further the greedy profits of corporations(and they will), I would quit my job and live a life of crime. Unfortunately, although this is not a good solution, a LOT of people have done this already. Criminal or slave, you take your pick.

10:22AM PDT on Sep 24, 2011

I understand that people should be banking for retirement but what I am saying is even the ones working are expected to keep their jobs by accepting sub-standard wages to be competitive with other countries with NO human rights or minimum wage laws, otherwise their jobs go overseas. These people barely meet ends meet as it is, where is this "extra" money supposed to come from? What kind of life could someone have if they have to work 3 jobs with no time for enjoyment? A life of slavery, that's what kind of life.