New statistics reveal that the retirement outlook is not so great for almost half of Americans. According to a recent CNBC news article (citing a report from GoBankingRates), around 42% of Americans have less than $10,000 saved for retirement. Out of the 1,000 adults polled online, factors like lack of planning and earning power and longer life expectancy contributed to the failure or ability to save.
Contributing Factors: The Recession and the End of Pensions
While Millennials are the most likely generation to have less than $10,000 saved at this point in their working career, older Americans are also significantly more pessimistic about their future. There could be an explanation: Older people are working full or part-time jobs for much longer. As my colleague, Grant McNutt, wrote in an article last year, almost 19 percent of folks over the age of 65 are working full or part-time. It’s no surprise that all generations of workers are facing a bleak outlook. Millennials came on to the workforce during the height of the great recession in 2008. That same recession prolonged the need for older Americans to work.
Grant’s article also goes on to make another good point. Businesses have moved away from traditional pensions to 401(k) plans. In other words, workers nearing retirement don’t have any guaranteed income stream as with the previous pension system. And I rarely see a 401(k) contribution plan that is not voluntary. To make matters worse, many people end up borrowing from their 401(k) plans throughout their working life to pay for unexpected expenses or just to make ends meet. This is a very weary proposition as workers then have less to save while they are paying the loan back and face a high tax penalty.
While the economic outlook for retirement may not be great now, the good news is that you don’t have to be a statistic. Whether you are near retirement or not, if you are struggling with credit card debt, medical bills, or any other type of debt, the offices of Bond & Botes, P.C. can help. Contact one of our office locations nearest you to set up a free consultation to discuss your situation.