1 in 4 Americans have no retirement savings — and those who do aren’t saving enough
Americans are saving too little for retirement, according to PwC's report on retirement in America.
One in four Americans has no retirement savings and those who save are not saving enough, Bernadette Geis, US wealth manager and wealth manager at PwC, told Yahoo Money.
"Those who, on average, [save] what they have saved will make them $ 1,000 a month in real money when they retire," Geis said.
The report found that the average retirement account balance for 55-64 year olds is $ 120,000. If divided over 15 years, that would mean a modest distribution of less than $ 1,000 per month and even less for those who survive their life expectancy.
The unwillingness to provide for old age leads to an impending "crisis," said Geis, as social security is expected to be exhausted by 2034 and "there is a huge population group that is unlikely to achieve their savings target."
Of those over 60, 13% have no retirement savings. This number rises to 17% for 45 to 59 year olds, to 26% for 30 to 44 year olds and to 42% for persons between 18 and 29 years of age.
One in four Americans has no retirement savings, and those who save are not saving enough, according to PwC's America Retirement Report. (Photo: Getty)
"There are no such thing as cost-effective and affordable plans."
There are several factors that have contributed to this dire outlook that awaits many Americans.
According to PwC research, spending on employer-sponsored retirement plans provided by small business owners is of great concern.
Read more: How Your Retirement Income Is Taxed
"There are no cost-effective and affordable plans for small businesses, which are still a very large segment of the US economy," said Geis.
The proposed solution? Geis suggested having more multi-employer defined contribution plans available in the market for employees of multiple small businesses to pool their resources, similar to the plans available to employees in medium and large companies.
"If these multi-employer plans were more widely adopted and more involved, that alone would increase the savings rate," she said.
Not enough Americans are saving up for retirement. (Graphic: PwC)
Read More: Ask The Expert: How To Build An Emergency Fund After The Pandemic
Another step in containing the crisis is to educate and incentivize people to participate in their available retirement plans.
Getting people to save more is "a combination of pooling more of the labor supply for benefits," Geis said, pointing out that employers should require student loan participants to get what they are for Paying their loans would apply to their 401 (k). s.
The industry could also benefit from technical integration to democratize information. In personal finance, technical automation of transfers, credit warnings and reminders has been introduced to benefit savers. However, AI integration will be discontinued on retirement accounts. According to Geis, the country's savers would benefit from reminders or push notifications to check balances or forecasting models, change contribution rates and update their asset allocations.
"There's no tool these days to give people that information, and you have to be pretty sophisticated to do all of these yourself, which is a challenge for a lot of people," she said. "If vendors and 401 (k) record holders could adapt to this new technology and squeeze more plan participants out to force engagement, it could certainly be a cause."
The Yahoo Money sister site Cashay has a weekly newsletter.
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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