By JLP | March 29, 2010
I spent some time this weekend reading over the Employee Benefits Research Institute’s 2010 Retirement Confidence Survey (PDF). This graphic found on page 16 of the report worries me:
Seventy-seven percent of American workers have less than $100,000 in savings and investments. Only 11% have more than $250,000 in savings and investments.
Even more troubling is that 27% of those surveyed had less than $1,000 in savings and investments.
Here are the reasons in the report for people not saving (emphasis mine):
Three in 10 Americans age 25 and over report they have not saved any money for retirement (29 percent of workers and retirees). Of these, 79 percent of workers and 60 percent of retirees say this is because they cannot or could not afford to save. Less than 10 percent mention each of these other reasons for not saving:
• Having other saving priorities (6 percent of both workers and retirees).
• Never getting around to it (5 percent of workers, 6 percent of retirees).
• Thinking they had plenty of time to save (4 percent of workers, 8 percent of retirees).
• Being ignorant and not informed about retirement planning (3 percent of workers, 6 percent of retirees).
• Retirement seeming too far away (2 percent of workers, 5 percent of retirees).
Thirty-one percent of workers who have not saved are nevertheless very or somewhat confident that they will have enough money for a comfortable retirement. However, this percentage has steadily declined from 47 percent in 2004, suggesting that workers are increasingly recognizing the need to save at least some money themselves if they would
like to achieve a financially secure retirement.
I would like to challenge those people who say they cannot save to try and find $3.30 per day ($6.60 would be even better) out of their budget to put towards their retirement. Making a habit of saving a small amount of money can really build a nest egg over a lifetime. Saving just $3.30 per day over 40 years would net a portfolio worth over $500,000 (not factoring in inflation)*. No, it’s not a lot BUT who’s to say that the amount saved couldn’t increase over time?
As a nation, we aren’t doing enough to educate and encourage people to take care of themselves. Rather, it seems we have become very good at telling people what they can’t do.
* Using the historical monthly total return average of .78% for the S&P 500 Index.