Only one in 10 Americans are knowledgeable about investments or financial products, and almost as few know how much they should save toward retirement, according to new data from Limra's Secure Retirement Institute.
Of baby boomers and Gen Xers, only four in 10 claim to know how much they should be saving; with millennials, the rate drops to three in 10.
The upshot of those realities is simple, says Cecilia Shiner, associate research director at the Secure Retirement Institute.
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"If consumers aren't confident that they are doing the basics correctly, it's unlikely they will be confident of their retirement prospects," she said.
Half of baby boomers with access to a defined contribution plan are saving a minimum of 10 percent in their plans, and 40 percent of Gen Xers and millennials save at that rate.
Whether that's enough to defer depends on how much an individual already has saved.
Recent calculations from the Employee Benefit Research Institute show that for some, a 10 percent deferral rate would be adequate.
Take a hypothetical 55-year old male who's been contributing steadily to his retirement. On a salary of $65,000 a year, with $272,000 in retirement savings, the EBRI says the worker can defer as little as 4.5 percent of salary to reach the highest probability of retiring successfully.
The problem, of course, is that few boomers have saved as much. Limra data shows half have less than $100,000 saved, and one-third have less than $25,000.
A 55-year old with zero savings will have to be deferring about a quarter of their income into a retirement plan just to have a 50-50 chance of retiring with adequate resources, according to EBRI's Retirement Security Projection Model.
Only 25 percent of workers report using a financial professional, which Shriner thinks translates to the trend of poor financial fluency and understanding of how much to save.
Other data from Empower Retirement, the plan-provider arm of Great-West Financial, showed only 19 percent of surveyed workers report accessing a financial advisor.
Those that do are on track to replace 82 percent of existing income in retirement, according to Empower's latest Lifetime Income Security report.
Those without access, or who choose not to seek advisory services, reportedly are on track to replace 55 percent of income, according to the Empower report.
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