The last weeks of every calendar year are always a favorite time to reflect on the immediate past, and look ahead at what’s to come. The same is true of retirement and financial planning surveys, and there have been a lot of them in recent weeks.
Not surprisingly, there continues to be bad news in the collective lot: too many individuals are ill-prepared for retirement; too many workers will have to delay when they can retire. But there is also some good news: workers did invest more in their retirement savings plans in 2014, and they vow to do even better in 2015.
So where exactly are we when it comes to retirement preparedness? Here’s what the latest surveys and research studies tell us:
They don’t have the knowledge
What Your Peers Are Reading
Starting with the worst news first; Americans get an ‘F’ grade when it comes to retirement know-how.
That is the finding of the Retirement Income Literacy Survey conducted for The American College of Financial Services, which polled 1,019 Americans aged 60 to 75 with at least $100,000 in assets.
The study asked participants a series of questions around how to best plan for and manage retirement. Topics included Social Security, Medicare, financial concepts, and investment strategy, among others.
The results: The vast majority (80 percent) received scores of 60 or lower; and only 20 percent earned a passing grade.
“Individuals have to make a lot of their own decisions today, David Littell, retirement income program director at The American College, was quoted in an article at CNBC. “It’s hard to understanding how you can make good choices without some basic knowledge of these issues.”
Interestingly, the lack of retirement knowledge conflicted with how many Americans view their retirement preparedness. Although 40 percent felt they were somewhat or very knowledgeable about saving for retirement, only 27 percent said they actually have a formal retirement plan.
Households feeling the squeeze
The message isn’t much better according to a recent analysis of 2013 Census Bureau data by Interest.com, which finds that the typical household aged 65 or older lives on $37,847 per year. That amount factors to 60 percent of what today’s typical 45 to 65 year-old earns, and is only 70 percent of the recommended annual income for a retired household.
“It’s clear that, nearly everywhere in the country, older Americans still don’t have the kind of money coming in they need for a secure and comfortable retirement,” Mike Sante, managing editor of Interest.com was quoted as saying in Money Magazine.
Whatever the savings numbers, they aren’t good
When it comes to how much Americans are saving for retirement, and how many have no savings, the answer depends on who you ask. Three recent studies painted somewhat different pictures, though none of them were encouraging.
More than one-third of Americans say they have not started saving for retirement, according to the monthly Financial Security Index by Bankrate. And a quarter of Americans approaching retirement age say they haven’t started saving yet either.
One factor may be that a growing number of Americans say they expect to just keep working, according to a blog at Bankrate.
“I have had people tell me all the time that they love their job and intend to work until they drop, thus there is no need for them to save,” Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling was quoted as saying. “However, these people are not considering the potential of a job loss or medical issue that prevents them from working.”
It’s a similar message in an article at Money Magazine, which says 31 percent of Americans have no savings at all. Money bases its projections on recent data from the Federal Reserve Board, which finds that “19 percent of those very close to retirement age, between the ages of 55 and 64, said they have no savings,” according to the article.