Are you saving for retirement? Chances are one-in-two you are not. According to a new LIMRA study, about 49 percent of Americans said they are not contributing to any retirement plan.
LIMRA, a financial services industry trade association, found that only 8 percent contribute to both a defined contribution plan (in which a company sets aside a specified percentage of money for the benefit of an employee and an Individual Retirement Account (IRA).
Further, the survey of 2,697 Americans found that only 1 in 5 consumers are considering contributing to an IRA in the next year, while nearly half feel they cannot afford to make a contribution.
Retirement is a primary concern even in Millionaire households, according to first quarter wealth level studies conducted by Millionaire Corner. Nearly half (48 percent) said they are concerned about having enough money set aside for their senior years, up from 46 percent in 2011. Forty-four percent are concerned about being able to retire as planned.
Not surprisingly, retirement concerns are heightened among younger baby boomers in the 45-54 age group, 61 percent of whom are concerned about having enough retirement income amassed and being able to retire as planned (The youngest Millionaire households—younger than 45— were the most likely to say that they will be delaying their retirement because of the prolonged economic downturn).
Setting up a savings plan for retirement should be job one for beginning investors, according to a separate survey we conducted in March. Nearly 69 percent said that they would tell neophyte investors to invest in a 401(k) or some other type of defined contribution plan.
But they are not, LIMRA found. Fifty-six percent of all 18-34 year-olds are not saving for their retirement. In the same age group, 40 percent contributed $2,500 or more to an IRA in the past year, compared to 50 percent of those ages 50-59 and 54 percent of those 60 and up.
Just 23 percent of Americans earning less than $50,000 annually made a similar IRA contribution.
“The findings from this survey were disturbing, given that people will increasingly need to rely on their personal savings to make ends meet in retirement," said Matthew Drinkwater, associate managing director at LIMRA’s retirement research division. “To have the adequate savings necessary to meet their financial needs in retirement—which could last 20 or more years—it is critical that these individuals begin saving systematically early in their working years.”
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.