As the U.S. emerges from the COVID-19 pandemic, Americans are facing inflation and an uncertain economy–all of which are affecting retirement savings according to a new report.
The survey data from Anytime Estimate, an online real estate education and calculator platform, shows that Baby Boomers have saved a median amount of just $112,000 for retirement. This represents 39% of the $286,000 that the financial services Fidelity Investments says they should have in the bank by age 60.
Millennials are saving remarkably better and have about $70,000 in retirement savings, putting them on track to reach the $107,000 Fidelity says they need by age 40.
Comparatively, 63% of American adults are currently saving for retirement, with a concerning one third those who aren’t currently saving reporting $0 in savings.
About half of Americans (55%) report they don’t believe they make enough money to adequately save for retirement. One in ten said they do not think they will ever be able to retire, although Gen Zers were 206% more likely than Boomers to believe they could retire before age 60.
Additionally, a just-released 2022 State of the Participant report from John Hancock Retirement found that more than half (53%) of 401k participants at the firm are positioned to replace at least 70% of their current income in their retirement years.
Anytime Estimate’s report also noted that more than half of Americans spent some of their retirement savings during the pandemic, and one in six spent $15,000 or more from their retirement savings.
The wariness around Social Security continues as 47% of Americans expect it to be a source of retirement income, yet 55% think the program will run out of funds by the time they retire. And 59% of Boomers plan to rely on Social Security in retirement while a more skeptical Millennial group (31%) feel the same.
No surprise, Americans are turning to other sources of income to help fund retirement. One in four, including 30% of millennials, say they will rely on cryptocurrency as a source of retirement income. Fidelity made waves when they became the first retirement plan provider to offer 401k investors access to bitcoin. The bold move drew instant scrutiny in light of the Department of Labor’s compliance assistance guidance published in March for 401k plan fiduciaries considering plan investments in cryptocurrencies.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
