The (Woeful) State of Retirement Savings

Tina Haapala |

By Gary Silverman, CFP®

As a follow-up to a conference I recently attended, one of the vendors sent me some information from a article. Apparently, I’m supposed to be surprised that most Americans have little if any, retirement savings. Well, that’s not exactly late-breaking news to me. I’ve been telling readers (and listeners for those of you who remember my radio and TV shows) this news for a couple of decades now. The article in question was from over 2 years ago. Nevertheless, I want to go over the results of the survey quoted to glean some information from it because I know you have an inquiring mind. (If you want to read the survey article yourself you can find it here.  

Some of the more notable findings: One-third of us have zero saved for retirement. Over half of us have less than $10,000 saved for retirement. We know there is a gender pay gap. There is also a gender retirement savings gap with women having less retirement savings than men. Women tend to live longer than men, so this gap presents an even bigger problem.  

If you’re older, you’re more likely to have saved more money. However, because you are older you have less time to fill any shortfalls. Over 45% of those 55 years old and above have saved $10,000 or less, so there are lots of shortfalls to fill. People seem to worry that millennials don’t have substantial retirement savings. Really? They are under 35 years old. I’m wondering how many of the older folks worried about them had “substantial” retirement savings in their 20s? That 3 of 5 of millennials have a retirement fund at all is a positive sign.

The ones I’m more worried about are the Gen Xers where half have less than $10,000 saved. This and other articles I’ve followed over the years point toward the Financial Crisis hitting right at the time you’d expect to see large increases in their pay. Either losing one’s job or virtually no wage increases for those that kept theirs didn’t help matters at all.

We old folks are not to be envied. While we are more likely to have saved something (and what we’ve saved is generally much larger than our younger friends) we are also a lot closer to, or already in, retirement. Less than half of us have saved what experts feel are reasonable balances to fund our retirement futures—well over a quarter of us older folks have nothing saved. This will cascade down to their kids, the Gen Xers, who will need to supplement mom & dad, and then will be unable to save for themselves.

Here’s where normally I admonish everyone to save more, tell them ways they can save more, and then admonish them some more. Then, not wanting to depress everyone too much tell you that things will be okay if you get started now.

Instead, next time I’m going to examine situations where having nothing, or next to nothing, saved for retirement can work…in the right circumstances.

Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing.