Nearly half of Americans aren’t contributing to a retirement plan, new research reveals.
LIMRA, Windsor, Conn., published this finding in a survey based on a nationally-representative survey of 2,697 Americans who are the primary financial decision-makers or share responsibility for making financial decisions. The survey was fielded in April.
The survey found that 49% of American’s aren’t contributing to a retirement plan. And Americans ages 18-34 are more likely (56%) to be among those not saving.
“The findings from this survey were disturbing, given that people will increasingly need to rely on their personal savings to make ends meet in retirement,” said Matthew Drinkwater, associate managing director, LIMRA Retirement Research. “It was especially troubling to see that a larger portion of younger Americans—who are less likely to have a defined benefit plan—are not saving for retirement in IRAs or defined contribution plans. In order to have the adequate savings necessary to meet their financial needs in retirement, which could last 20 or more years, it is critical that these individuals begin saving systematically early in their working years.”
The survey found that only a quarter of all Americans and less than a third of Americans over age 50 work with a financial professional to plan for retirement. However, even controlling for income, those who did were more likely to be contributing to a defined contribution plan or IRA.
Seventy percent report that their financial professionals recommend how much they should save for retirement. These findings suggest that financial professionals can have a positive influence on their clients’ saving behavior, the survey says.
Younger and higher-income consumers are more likely to be considering contributing to an IRA in the next year. But nearly half of all consumers say they are not planning to contribute to an IRA because they could not afford to do so.
The survey also reveals consumers’ lack of knowledge about IRAs. On average, consumers answered almost half the questions posed about IRAs incorrectly; those consumers who currently contribute to IRAs answered only slightly better than non-IRA-owners.