A new Wells Fargo survey reveals the grim reality of retirement planning for many middle-class Americans.
One in 5 middle-class Americans say they would rather die early than run out of money during retirement.
That was the finding of a new retirement survey by Wells Fargo. What makes that statistic even more alarming (and disheartening) is that 34 percent of middle-class Americans are currently contributing nothing – not one dollar – to a retirement plan, the survey also found.
While two-thirds (68 percent) of those surveyed said saving for retirement is more difficult than expected, just 38 percent said they’re sacrificing now so they can tuck money away for their golden years. Joe Ready, director of Institutional Retirement and Trust at Wells Fargo, said:
Saving for retirement isn’t easy. It requires sacrifice, and it’s not something people can push off and hope to achieve later in life. If people in their 20s, 30s or 40s aren’t saving today, they are losing the benefit of time compounding the value of their money. That growth can’t be made up later.
Middle-class Americans have socked away a median of $20,000 for retirement, according to the survey. But they expect they’ll need about $250,000.
… the survey also reveals that Americans are deeply aware their personal retirement savings are inadequate, especially as they get older. Forty-eight percent of respondents in their 50s said they won’t have enough to live on if they stop working. Would-be retirees with inadequate savings are left with the choice of working longer or accepting the much lower standard of living that comes with relying only on the government safety net to survive.
More than half of survey respondents said they’d give up discretionary purchases, such as spa days, jewelry and dining out, so they could save more for retirement.
But, as HuffPo noted, most Americans aren’t spending their money on frivolous items and services. Instead, 65 percent of most Americans’ spending is gobbled up by health care, housing, food and transportation. And incomes haven’t been going up.
“In other words, Americans’ inability to save for retirement is all about high fixed costs and stagnant wages, not indulgence and a lack of willpower,” HuffPo said.
The survey focused on Americans between the ages of 25 and 75 with a median household income of $63,000.
How are you saving for retirement? Share your comments below or on our Facebook page. And also check out this video by Stacy Johnson about how to ensure you’ll have enough money when you retire.