Be afraid, be very afraid.
Lack of savings paints a disconcerting picture about financial preparedness in America, with nearly a third of U.S. adults within three paychecks of needing to either borrow money or skip paying one or more bills.
According to the 2019 Planning & Progress Study from Northwestern Mutual, more than a fifth have less than $5,000 saved for retirement, and nearly half of working adults expect to work past the traditional retirement age of 65.
“People are skating on some very thin ice financially,” says Emily Holbrook, senior director of planning at Northwestern Mutual. “While there are some signs of improvement since last year, we still have a long way to go, and for most Americans, there’s no way to get there without a plan.”
More tough numbers include:
- One in five Americans have less than $5,000 saved for retirement, and 15% have no retirement savings at all.
- While 10,000 Baby Boomers turn 65 every day, nearly one in five have less than $5,000 saved for retirement and 20% have less than $5,000 in personal savings.
- For Gen X, the numbers are greater—21% have less than $5,000 saved for retirement and 22% have less than $5,000 in personal savings.
- More than half of Americans don’t know how much they’ll need to retire comfortably.
- More than a fifth of non-retired U.S. adults believe it is not at all likely that Social Security will be available when they retire.
- On average, people think there is a 45% chance they will outlive their savings, and 41% have taken no steps to address it.
Work and die
The study also found that 46% of Americans expect to work past the traditional retirement age of 65.
Nearly one out of five Baby Boomers and an equal percentage of Generation X expect to work even longer—past the age of 74.
Interestingly, more than half of Americans who expect to work past age 65 say it will be by choice, compared to 47% who say it will be out of necessity.
Among those who say they expect to work past age 65 out of necessity, the top three reasons why include:
- I won’t have enough saved to retire comfortably (78%)
- I do not feel like Social Security will take care of my needs (56%)
- I am concerned about rising costs like healthcare (49%)
- For those expecting to work past 65 by choice, the top three reasons why include:
- I enjoy my job/career and would like to continue (58%)
- I want additional disposable income (46%)
- It is a social outlet that will help me stay active/prevent boredom (39%)