More than half of U.S. households have saved less than they should for a comfortable retirement, and 59 percent of Americans expect their standard of living in old age to be lower than it is now, according to studies released yesterday by a consumer group.
An analysis based on Federal Reserve data found that 56 percent of households are lagging in saving for retirement. Families with higher incomes tended to have adequate savings, while only 23 percent of households with annual income between $10,000 and $25,000 had a sufficient cushion, the analysis released by the Consumer Federation of America showed.
It also found that black and Hispanic households were much less likely to have adequate retirement savings than white ones. On average, it found that 47.6 percent of white households had sufficient savings, compared with 28.4 percent of black households and 24.5 percent of Hispanic families.
Unmarried people, both men and women, tended to be less likely to have sufficient savings than married people.
The analysis by Catherine P. Montalto, an economics professor at Ohio State University, found that job-related retirement plans are the easiest way to build savings, helping assure adequate retirement savings for about 55 percent of people who participate in an employer-sponsored retirement plan, such as a pension plan or the increasingly popular 401(k) investment plans.
However, few lower-income workers only 11 percent of those earning less than $10,000 a year have access to those retirement plans through their jobs.
“Retirement savings would dramatically increase if all workers had access to a retirement plan at work,” Stephen Brobeck, executive director of Consumer Federation, said at a news conference. “Payroll deductions are the easiest way to save.”
In addition, he noted, matching contributions made by employers in some retirement investment plans “provide a powerful incentive” for workers to save.
Adequate retirement savings were defined as enough money to allow people to maintain a lifestyle close to their current one.
A related opinion survey of 1,006 adults around the United States found that 40 percent of respondents believe their retirement savings would provide a lower-than-current-but-adequate standard of living, while 19 percent said they would provide a less-than-adequate standard of living.
On average, respondents said they expected 29 percent of their retirement income to be provided by Social Security.
In Congress, discussions of proposals to let Americans keep some of their Social Security contributions to invest individually in the stock market have stalled.
The telephone survey, conducted March 9-12 by Opinion Research Corp. International, has a margin of error of plus or minus 3 percent.
The survey and its analysis were commissioned by the Consumer Federation of America and DirectAdvice.com, an on-line company that provides financial-planning services. The survey and analysis were funded by DirectAdvice.com.