This Alarming Stat Shows Just How Unprepared Americans are for Retirement
Friends, let’s have a chat about retirement.
I know that saving money is hard.
And saving so that an abstract future version of you can have all the fun you wish you could be having right now? That’s even harder.
While forcing yourself to save for something that’s far from immediately gratifying is difficult, it’s one of the most important moves present-day you can make for future you — unless future you wants to be one of the many Americans working past age 65 because they’re unable to retire.
And it might be a bigger problem than we realize: Bloomberg recently published an analysis of census data that says most Americans aren’t saving enough for retirement. In fact, most people aren’t saving for retirement at all.
Let’s Look at the Damage
Census researchers Michael Gideon and Joshua Mitchell analyzed W-2 tax records from 2012 to discover that a whopping two-thirds of American workers aren’t putting any money into 401(k) plans or similar retirement funds.
Let me say that again: Two-thirds of Americans aren’t saving for retirement. At all.
Gideon and Mitchell found that 79% of Americans have access to employer-sponsored 401(k)-type accounts. However, they also found that just 41% of workers are actually taking advantage of those plans.
Just 32% of American workers are saving for retirement in workplace accounts.
But why? Well, the folks over at Bloomberg propose that it simply boils down to workers being unaware of the options available to them.
Several states have tried to rectify the situation by rolling out programs forcing every eligible worker to sign up for a retirement account, either through the individual companies or through a state-sponsored plan. However, these programs might end before they begin.
What Does This Mean for You?
Well, consider this your friendly reminder to look into your workplace retirement account options.
And encourage your friends, family and co-workers to do the same!
If you don’t have access to a retirement account through your workplace, there are free tools that can help you start one on your own.
If you’re young, don’t fall into the trap of believing that you can always start saving for retirement tomorrow. If you start saving at 21, you would only have to put away about $100 a month to retire comfortably.
Of course, there are other ways to make your retirement account work for you, like using the beauty of compound interest (and some Penny Hoarding techniques!) to retire early — maybe even 20 years early.
Trust me: Future you will thank present-day you.
Your Turn: Do you contribute to a retirement account?
Grace Schweizer is a junior writer at The Penny Hoarder. She’s lucky to work for an incredible company that helps her navigate her financial future with ease.