Most people are aware that the state of retirement in the United States is looking rather gloomy. But a new study has found the situation could be worse than we thought.
The "Report on the Economic Well-Being of U.S. Households in 2014," just published by the Board of Governors of the Federal Reserve System, has found that, while optimism is improving, the same is not necessarily true of their financial situations. There have been "only mild improvements" in respondents' overall well-being, but the same can't be said for the state of their retirement preparation.
Thirty-nine percent of non-retirees, the study found, "have given little or no thought to financial planning for retirement," while 31 percent have no retirement savings or pension. None.
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Given that fact, it's to be expected that 45 percent of non-retirees who plan to retire intend to keep working to some extent during retirement to make enough money to live. And 26 percent said that their "retirement plan" was to keep working as long as possible, while 12 percent said they don't intend to retire at all.
Many of those who haven't planned and those who intend to keep working share strained financial circumstances; 55 percent of those whose household income is below $40,000 per year say they either won't retire at all or will work as long as they can.
And why plan for something you never think will happen? Among those who say they've given little or no thought to the subject, almost 29 percent have incomes below $40,000 annually. (In contrast, among those with incomes greater than $100,000, 27.6 percent say they've given "a fair amount" of thought to financial planning for retirement.)
Not only are people failing to save, despite wanting to do so, they're not confident in their ability to manage the investments in any retirement plans they might have. More than half (51 percent) of respondents who have self-directed retirement accounts, such as a 401(k), IRA or similar plan, say that they are either "not confident" or just "slightly confident" that they are able to make the right investment decisions in these plans.
And a very high percentage of older respondents expect that Social Security will help with retirement expenses. Among those aged 45–59, 79.5 percent are counting on Social Security to fill in at least some of the financial gaps in their retirement savings, while among those aged 60 and over, 91.7 percent are relying on it to do so.
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