Forty percent of Americans over the age of 18 and not yet retired save no money each month toward retirement, according to an eNation survey, conducted on behalf of LIMRA Retirement Research in October.
The report also found that 19 percent of adults not yet retired typically save less than $100 per month, while 27 percent of consumers save $100 to $499 per month. Forty-two percent of households with incomes over $50,000 a year were saving $100 or less or nothing for retirement each month.
"These findings are alarming," said Matthew Drinkwater, associate managing director of LIMRA Retirement Research. "Our research indicates that fewer future retirees will have pensions to pay for their living expenses and more will be relying on their personal savings to fund their retirement. Without a significant change in savings behavior, many Americans will not have enough money to afford to retire."
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The study also found that many Americans who have access to employer-sponsored retirement plans, like 401(k) and 403(b) plans, don't take full advantage of the tax-deferred savings.
While 55 percent of adults surveyed do not contribute to an employer-sponsored plan, of those that do, 48 percent contribute less than 5 percent of their annual earnings. The survey also found that more than 20 percent fewer women contribute to their employer-sponsored retirement plan than men (39 percent vs. 50 percent). Women also are more likely than men to contribute less than 3 percent of their earnings.
The good news, according to LIMRA, is that only 12 percent of plan participants reduced their contribution rate over the past year. Twenty-four percent increased their saving rate and 64 percent kept their contribution rate constant.
"Obviously, educating people about the benefits of systematic saving is critical," said Drinkwater. "But research proves that auto-enrollment and auto-escalation programs within employer-sponsored retirement plans are valuable tools to help employees get to adequate contribution levels that will help them reach their financial goals in retirement."
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