While retirement is often seen as a time to relax, travel, or maybe play some golf, that’s an unrealistic scenario for many because most workers 40 years and older aren’t saving nearly enough to meet their expectations once they retire, a new survey shows.
About 25% of respondents across four age groups between 40 and 61 have no retirement savings at all—a situation that becomes worse among those 62 to 66 years old, according to research from the Insured Retirement Institute, a financial services trade association for the retirement income industry. Among the 62-66 cohort, the percentage without savings increases to 33%, the research showed. People 67 to 73 do a little better, with only about one in five lacking savings.
Among savers in the 60% of households earning less than $100,000 per year, more than half are stashing away less than 10% of their income, the survey said. That’s less than the rule of thumb which calls for saving at least 15% of your annual income for retirement. And although 58% of the survey respondents believe they will need at least $55,000 or more in annual retirement income, 40% of those 62 to 66 and 60% between 67 and 73 had a retirement savings balance below $50,000, the survey said.
Even so, the research showed 46% of respondents expect to retire by age 65, and nearly 70% think they will not only have enough savings to cover their basic needs, but will also have enough for some travel and leisure—exposing the disconnect between how people are saving and what they expect will happen once they retire.
Though Fidelity Investments noted an overall rise in average 401(k) contributions last year, many workers still “may have income expectations that are unrealistic,” the institute said in a report. “Most workers will find that despite wanting to retire at a younger age, they will have to work until age 67 or later to have any chance at a secure retirement given limited savings and no pension.”
The survey, taken March 10-18, consisted of online interviews with 2,241 adults 40-80.
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