Most Have Less Than $25,000 For Retirement

The Employee Benefit Research Institute (EBRI) is a large non-profit group in Washington, DC that produces original research on trends in health, savings, retirement and related issues. EBRI maintains the largest 401(k) database in the nation. Their work is highly respected.

EBRI recently conducted its annual “Retirement Confidence Survey” and the results are alarming. The survey found that 57% of respondents had less than $25,000 in savings and investments. Even worse, over half of those (28%) have less than $1,000 in savings.

Among workers age 55 and older, 33% have less than $10,000 in savings and/or investments. In addition, the percentage of workers currently saving for retirement has continued to decline to 57% from 65% recorded in 2009.

As a result, worker’s confidence in their ability to live comfortably throughout retirement remains low, with 28% of workers reporting they are not at all confident. This is an increase of 5% from last year and the highest level recorded in the 23 years the EBRI has been conducting the survey.

“The recent low levels of retirement confidence may be, at least partly, the result of the increasing awareness of the challenges many Americans face in trying to achieve a financially secure retirement,” says Jack VanDerhei, EBRI research director, and co-author of the report.

VanDerhei notes that immediate financial needs are increasingly taking precedence over saving for retirement. Day-to-day living expenses and too much debt hinder workers’ ability to save for the future. Even worse, EBRI notes that even with this low level of savings, one in three workers withdrew money from their savings to pay current expenses.

Many workers cite an inability to determine just how much money they will need for retirement as a reason for not saving more. Almost half of workers age 45 and older have not tried to calculate how much money they will need to have saved for a comfortable retirement, according to EBRI. Those that did complete a retirement-savings-needs-calculation had more confidence about their ability to put money aside and had higher savings goals than those who had not done the calculation.

If you happen to be among those who have not run a calculation showing how much you will need for a comfortable retirement, here are links to two professional retirement calculator programs (both are free):

From CNN Money -

From AARP -

To compensate for their lack of retirement funds, many workers plan on delaying retirement. Thirty-six percent expect to wait until after age 65 to retire. This is a significant increase from the 11% of workers who expected to retire after age 65 when the survey was first conducted in 1991. Additionally, 69% of respondents said they plan to find paid employment once retired from their primary job. That is easier said than done in this weak economy!


In 1970, the national savings rate was near 10%. But by 1990, the savings rate had fallen to around 6.5%. By 2000 it had plunged below 2%. There was a surge in the savings rate during the Great Recession as you can see above. But by late 2010, the national savings rate was back down to 5.5%. In 2011 and 2012, the rate fell even further. In January of this year, the national saving rate was only 2.4%.

The point is, most Americans are not saving nearly enough for retirement. Period. As I pointed out in my March 19 E-Letter, real inflation is significantly higher than the 2% number we are being fed by the government. Prices rising, savings plunging – not a good combination. I think we all know how this movie ends.

Have a great Easter weekend everyone!

Posted 04-01-2013 11:38 AM by Gary D. Halbert