Retirement Statistics That Will Scare the Crap Out of You
Updated: May 23, 2019
Unfortunately, as a whole, Americans are not doing enough to save for retirement. Social Security isn't likely to be enough to to live on and let's face it, it's not exactly on solid financial footing. Here are 10 facts that may help you jumpstart your financial future.
1. One in three Americans have nothing saved for retirement
and more than half of Americans have less than $10,000 saved for retirement. A recent survey by GOBankingRates.com shows that the "closer savers get to retirement, the further behind important savings benchmarks they fall." For baby boomers nearing retirement this a crucial problem that needs to be addressed. In addition the National Institute on Retirement Security states that the retirement savings deficit is between $6.8 and $14 trillion.
2. Women must save 18% while men to save 10% to reach the same financial level in retirement
One of the reasons that women fall behind in retirement savings is the retirement gap. They simply don't earn as much as men. On average, women earn $.079 for every dollar men earn in a full-time position. Women's retirement savings needs are often greater than men's because they are more likely to live longer, increasing their chances of outliving their retirement funds.
3. 52% of Gen-Xer's have less than $10,000 in retirement savings
The great recession hit Gen X hard, costing members of of this generation 45% of their net wealth. Add to that wide a wide range of financial obligations such as mortgages, college tuition and aging parents, Gen X is could benefit from spending time on creating a financial plan to get back on track.
4. By 2033, Social Security will need to be cut by 23%
Social Security is the most commonly cited source of income for retirees. Unless there is reform, benefits will have to be cut by 23% in aggregate in 2033. What does that mean you ask? It means that after the depletion of reserves, tax income will only be able to pay 77% of schedule benefits in 2033. If you're depending on Social Security to fund your retirement then you may want to start thinking about other avenues of retirement income.
5. A couple will spend an estimated $245,000 on healthcare throughout retirement
Although it's been said that many things get better age, health and healthcare costs are not usually among these things. In Fidelity's 2015 Couples Retirement Study, nearly three-fourths of couples surveyed said being able to afford unexpected health care costs in retirement was their top concern. Longer life expectancies and anticipated annual increases for medical and prescriptions are contributing factors to this cost. On top of that this figure does not include the expense of long-term care or a nursing home.
6. Claiming Social Security at 62 can result in a permanent reduction of as much as 30%
Taking your Social Security before FRA (Full Retirement Age) will permanently reduce your benefits by 6.67% per year for up to three years before FRA and another 5% per year thereafter. That's a big hit to your income if you plan on using Social Security to fund your retirement.
7. Millennials with $30,000 in student loans could retire with $325,000 less than their debt-free peers
With the staggering costs of higher education, student loans are growing in number and size. In 2015, the average student loan debt totaled $33,000, compared to $10,000 in 1990! On average, millennials who start their careers with $30,000 in student loans could have $325,000 less in retirement savings compared to debt-free peers. (4)
8. According to the Federal Reserve, half of Americans couldn't handle a $400 unexpected expense without selling or borrowing the money
Americans are more likely to tap into their retirement savings early to help pay for unexpected or emergency expenses or use a high-interest credit card that can make saving money difficult.
9. Only 23% of American workers say they're "very" confident about having enough money for a comfortable retirement.
That leaves 77% of American workers feeling less than "very" confident about a comfortable retirement, with debt being the number concern.
10. The average Social Security benefit is $1,409.91 for a retired worker
As of March 2018, the average retired worker gets a Social Security benefit of $1,409.91. This translates to an average annual income of less than $17,000.
You should be thinking about retirement goals and dreams now and create a financial plan today to get there. More often then not, creating a plan after retirement will leave you a day late and a dollar short.