An issue that has found its way into political campaigns and dinner conversations for years is increasingly manifesting itself in retirement planning sessions with financial advisors and wealth managers: rising income inequality in America.
Data trends for the past several years have indicated that the rich are getting richer and the poor are getting poorer in the U.S., with the top 1% of families taking home an average of 26.3 times as much income as the bottom 99% last year, according to the non-partisan Economic Policy Institute. This trend, which has accelerated since 2009, is a reversal of what was seen during and after the Great Depression, where the gap between rich and poor narrowed.
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So it is perhaps not surprising that a pair of recent studies confirm that the wealth disparity gap can now be measured when it comes to retirement planning and funding.
The 2018 Planning & Progress Study from Northwestern Mutual found a significant dichotomy. On the one hand, the study revealed that a shocking 21% of Americans have nothing at all saved for retirement and another 10% have less than $5,000 in savings. More broadly, 78% of Americans reported being “extremely” or “somewhat” concerned about not having enough money for retirement. On the other hand, roughly one in four respondents have at least $200,000 in savings and 22% report they are “not at all” concerned about having sufficient finances available for their golden years.