Average Retirement Savings By Age

Too many earners 'forgo financial advice'

Overconfidence concerning financial literacy was a leading factor when South African consumers experienced money trouble, a survey revealed yesterday.

The acsis financial security barometer surveyed middle- to higher-income households and revealed that more than 90 percent of people who had a minimum household income of R30 000 a month believed they were well informed on financial matters.

People were starting to rely heavily on the internet, financial newspapers and magazines if not their family and friends for financial advice.

“There are people in the R50 000 plus income groups who say they don’t need a financial planner, they can do their own thing. That’s where you start worrying, because that’s a huge amount of income to plan on their own,” said Andrew Bradley, acsis chief executive.

Bradley said this was concerning because the barometer showed that overall, people who had financial planners were more satisfied with their financial position and rated their financial security at a higher level.

A 53 percent majority of respondents made use of a financial planner, but most indicated that they were responsible for making final decisions.

About 52 percent of people who did not make use of financial planners indicated that they “could do their own thing” while others were not interested or did not trust financial planners.

The confidence to handle their own finances, however, affected future provisions negatively. The survey showed that people were increasingly delaying saving for retirement. Retirees had generally started their retirement planning at around age 28, while pre-retirees started at the age of 31.

“With medical advances, people are generally living longer, meaning that their retirement savings will need to last a lot longer than previous generations’ savings.”

He said the current trend of living longer, incurring more debt and saving less exacerbated an already bad situation.

The survey also showed that the average age at which people making use of a financial advisor started saving was 29.6 versus 33 for those who saved without a professional.

“While this difference may not seem like a big deal, an extra three or four years can significantly boost your retirement savings as compounding works in your favour.” said Bradley.

Are You Saving Enough for Retirement? | Retirement Planning

Looking at the average retirement savings for Americans is pretty eye-opening. Believe it or not, 46% of all U.S. Workers have saved less than 10,000 for retirement . This number is not good, but it’s somewhat understandable. It includes a lot of young workers who have yet to realize the importance of saving early. It is this next number that’s really disturbing. According to a Retirement Confidence Survey done by the Employee Benefit Research Institute (EBRI), 36% of workers over the age of fifty-five have saved less than 25,000 for their retirement. Clearly the average retirement savings is not enough.

The Average Retirement Savings is not the Only Scary Figure

The average retirement savings of workers in the United States is not good, but there are other numbers that also speak to an unclear future for many retirees. According to the EBRI, nearly 58% of workers have made no attempt to figure out how much income they’ll need in retirement. Most people seem to think they can simply stick to the same budget they’ve during their working years. There are a number of problems with that assertion.

This is an important part of this particular subject matter. Even if your income and lifestyle remain the same, inflation is going to increase the cost of that lifestyle. Adjusting for cost of living increases is extremely important. Another factor that people do not consider is that your retirement income will probably be less than your working income. Even if you have a pension to go along with your Social Security income, that will still fall short of how much income you’re earning now. For those without pensions, Social Security will only cover about one-third of your current income. Your retirement savings will have to make up the difference. Considering how low the average retirement savings is for most Americans, things are not looking so good.

Health care costs are the most overlooked retirement expenses when it comes to retirement planning . The 58% of workers who have not even attempted to figure out their retirement expenses do not realize that medical expenses for senior citizens can reach into the hundreds of thousands of dollars. Long-term care alone will cost you 80,000 per year or more. The average American over the age of sixty-five will need approximately three years of long-term care. That is a lot of money.

The Average Retirement Savings is not Enough

All of the workers over the age of fifty who have not done any retirement planning need to get started immediately. Meet with a financial planner or do it yourself with a good retirement calculator . Either way, you need to start figuring out how much money you’ll need for retirement. With 58% of workers believing they’ll need at least 250,000 or more to maintain their current lifestyle during retirement, it’s clear that Americans are going to need to start saving more. In 2011, only 10% of workers have retirement savings of 250,000 or greater. The younger workers have time on their side. They need to start saving more and start doing it now. The older workers, however, need to start making some difficult decisions regarding their retirement. A few of their options include delaying retirement, cutting back on expenses, moving to a more tax-friendly state, or working part-time during retirement. Some of these things will not be easy, but they may be the only way you can secure your financial future.

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