By Myra O’Dell
I recently did some continuing education on the topic of retirement. Among a review of different types of savings vehicles and their corresponding regulations, the materials covered a number of interesting statistics and facts that I would like to share:
- Currently, there is a trend away from early retirement that can be seen from the chart below. The percentage of people working until age 65 or over is steadily increasing.
- Workers expecting to work later into retirement (compared to last years’ expectation) rose sharply from 5% to 25% in the period from 2007-2009 and hit a high of 22% from 2012-2013.
- In 2013, more than half of all workers in the United States had less than $25,000 in savings and the same amount of workers had not attempted to calculate their retirement needs.
- It is estimated that 38.3 million working-age households (45%) do not have any retirement account assets and for those near retirement age, there is an average of $12,000 median defined contribution/IRA balance.
- 29% of workers feel that a comfortable retirement can be obtained for less than $250,000.
- During 2010, 6.9% of participants took a withdrawal from their retirement plan, which is close to the record high of 7.0% in 2009. Before the 2008 economic downturn, only around 5% of participants took a withdrawal. Twenty percent of all withdrawals were hardships, with an average amount of $5,510.
- The 2013 Annual Report of Trustees forecasts that Social Security funds will be depleted in 2033 at which time it could pay only 77% of benefits.
- Over half of the American workforce is employed by small businesses, and of these workers, only 1/5 are able to take steps toward securing their own retirement income through their employer.
Some of these statistics are alarming and serve as a good reminder that we should all try to live well within our means so we can use the surplus to fund future endeavors. Make it a priority to pay yourself by reducing debt and increasing savings. The sooner you start this habit, the quicker you will reach financial independence.