Two-thirds of Americans (67%) have at least some money invested in retirement accounts, but close to one in four don’t know how much they’ve saved, according to a State of Financial Preparedness Report released today by the TIAA Institute.
That’s true for 24% of retirees and 22% of those planning to retire according to the report, focused on how people of all ages, races, genders and ethnicities manage their daily expenses while saving for retirement.
More than seven in 10 whites (76%) and Asian Americans/Pacific Islanders (71%) have retirement accounts, but that’s true for only about half of Black (49%) and Hispanic (52%) Americans. Many Hispanic (37%) and Black Americans (28%) who have not yet retired are unsure of how much they have saved, underscoring the significance of the uncertainty.
The research found that large majorities of people across all races and ethnicities spend time thinking about retirement savings—how much money they’ll need to save and how long it will take to do that. That’s true for 68% of Americans who are planning to retire, including 70% of Hispanic Americans, along with 68% of whites, 66% of Black Americans and 59% of Asian Americans/Pacific Islanders.
But while each group considers those calculations, underscoring the importance of preparing for retirement, the report highlights stark differences in how many people have saved, how much they’ve saved and how confident they are moving forward.
“We hope this research deeply informs the efforts underway to address our nation’s retirement crisis and spurs the actions needed to retire the financial and retirement inequality that too many people face,” said Surya Kolluri, head of the TIAA Institute.
“We’ve long talked about retiring inequality, but this new data does more to identify gaps, challenges and opportunities,” Kolluri added. “If most people are planning for retirement but can’t follow their plans, that’s a call to action for employers, policymakers, financial advisors, retirement services providers and others.”
The report comes at a time when life expectancy has risen by 17 years since the Social Security program debuted in 1935 – meaning people could have longer retirements—but 40% of U.S. households already risk running short of money in retirement.
More key takeaways:
- Fewer than half (47%) of those not yet retired are “very” or “somewhat” confident they’ll retire when planned. Those with the lowest confidence rates are Hispanic Americans and people ages 22-34 (each 37%).
- When measuring liquid, investable assets, Americans overall are more than twice as likely to have less than $50,000 (44%) as they are to have saved at least $500,000 (19%).
- All told, 15% have no liquid investable assets, including one in four Black (26%), Native American (26%) and Hispanic (25%) Americans.
- Roughly 30% of whites and Asian Americans/Pacific Islanders have saved at least $250,000 for retirement. That’s almost twice as many as the number of Hispanic Americans (17%) and Black Americans (16%).
- One-fourth (26%) of Black Americans expect they’ll need some kind of paid employment for income during their retirement. That’s at least 10 percentage points higher than any other race or ethnicity.
- Six in 10 (58%) Americans have a rainy-day fund, but that number varies widely for different groups. It’s true for three in four (73%) Asian Americans/Pacific Islanders and two thirds (64%) of whites, but less than half (46%) of Hispanic Americans and only 40% of Black Americans. All told, a notable one in eight Americans (13%) could not come up with just $2,000 to pay for an unexpected need.
- Americans have an average of two loans—mostly mortgages (47%) auto (41%) and student loans (20%). One in three (34%) carry monthly credit card debt, and another third of Americans (32%) have worked to pay down their debt over the past year.
- Less than half of younger workers think they’ll have access to the top retirement income sources used by today’s retirees: Social Security (73%) and employer pensions (53%). Of those ages 22-34, 47% think they’ll receive Social Security, and 15% think they’ll receive pensions.
- Half of today’s retirees (48%) and just one fifth of those not yet retired have consulted a financial advisor.
“While we see progress in some areas, we will continue to provide deeper insight on many of the demographics that make America diverse,” Kolluri said. “That granular data will give fresh perspective, allowing people—employers, employees, policymakers, advisors, and others—to better identify the steps we must take.”
The TIAA Institute is a think-tank within TIAA, conducting research in the areas of financial literacy and longevity literacy, lifetime income, retirement plan design and behavioral finance in the context of retirement.
The full State of Financial Preparedness Report can be found HERE.
SEE ALSO:
• TIAA and Wyclef Jean Release Song Addressing Retirement Disparities
• How Different Demographics Tackle Retirement Readiness
• 4 Retirement Initiatives Vital to Closing the Racial Wealth Gap
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
