Retirement Savings: It’s Worse Today Than a Year Ago

Piggy BankMaybe it’s because we’re footing the bill for our kids’ college tuition, supporting our adult children living at home or helping our elderly parents. Whatever the reason, this much is clear: Too many of us are saving less for our retirement today than we were a year ago.

As many as one in five employees ages 50 to 64 contributed less to their retirement savings this year, a new Bankrate.com report finds. Although one-half managed to squirrel away the same amount as last year, one in 15 didn’t save anything toward their retirement in either year.

This [age] group has consistently shown some of the lowest feelings of financial security relative to other age groups — specifically low feelings of job security, the least comfort with their savings levels, and the least comfort level with their debt burdens,” says Greg McBride, a senior financial analyst at Bankrate.com. “It’s not surprising they have a higher likelihood than other age brackets to be saving less for retirement than one year ago.”

Among workers who are close to retiring, those ages 65 and up, 7 percent has stashed away more for retirement than last year but 13 percent report they’re actually saving less.

The state of retirement savings has been a critical issue for older workers, especially so because of the recession.  As people lost their jobs, found new work at lower pay or took early Social Security, their ability to save for retirement diminished. Making things worse, fewer retirees will have pensions to fall back on, relying instead on what they’re able to save in their 401(k) plans.

According to Federal Reserve data last year, 40 percent of households with people ages 55 to 64 had no retirement savings at all. Of the 60 percent that did, the median balance was about $100,000.

Gary Koenig, director of economic security at AARP’s Public Policy Institute, says people tend to underestimate how much money they’ll need to live comparably in retirement. But he added that the path to a secure retirement has never been more challenging for workers.

What can you do to beef up savings?

  • Lower your spending
  • Recommit to your goals
  • Use retirement calculators and tools for savings and income planning
  • Work as long as possible
  • Don’t take early Social Security

 

Photo Courtesy: www.Seniorliving.org

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