A new survey released by the American Association of Retired Persons, or AARP, reveals that a majority of Americans are worried they won’t have enough money to live comfortably in retirement. Specifically, the survey found that 61% of Americans are concerned they won’t have enough saved to support them after they retire
Meanwhile, 40% of men and 30% of women feel they are on track. However, confidence is waning, especially among men, as 42% of men describe their financial situation as fair or poor, up from 34% at the start of 2022.
Perhaps the most startling statistics in the survey are that 20% of Americans in their 50s have no retirement savings at all, and 26% of people who are not yet retired don’t expect to ever retire.
Inflation taking a toll
The biggest culprit in keeping Americans from saving and investing is inflation.
“Every adult in America deserves to retire with dignity and financial security. Yet far too many people lack access to retirement savings options and this, coupled with higher prices, is making it increasingly hard for people to choose when to retire,” said Indira Venkateswaran, senior vice president of research at AARP. “Everyday expenses continue to be the top barrier to saving more for retirement, and some older Americans say that they never expect to retire.”
To that point, 70% of Americans are worried about prices rising faster than their income. Additionally, 37% are anxious about covering basic expenses such as food and housing, while 26% are concerned about covering care-giving costs.
In addition, many are having trouble paying down their credit cards, let alone saving for retirement. The survey revealed that 30% of older adults carry a credit card balance of $10,000 or more, while 12% carry $20,000 or more. The latter is up from 8% roughly a year ago.
However, about 33% of respondents are hopeful that their finances will improve 12 months from now, which could be related to the hope of inflation trending lower.
About 57 million have no workplace retirement plan
Another major barrier for Americans is a lack of access to retirement savings vehicles like 401(k) plans. The AARP said Americans are 15 times more likely to save for retirement when they have a workplace plan.
However, approximately 57 million people do not have access to a retirement plan at work, and the AARP is working to do something about that.
“America is facing a serious retirement crisis. AARP has a long history of supporting legislation to expand access to retirement savings, but Congress must act more swiftly to provide the financial support older Americans need and deserve,” said Nancy LeaMond, executive vice president and chief advocacy and engagement officer at AARP.
Currently, there are several bills pending in Congress that would address this issue. One is the Retirement Savings for Americans Act of 2023, which would provide retirement savings accounts to eligible full- and part-time workers who don’t have employer-sponsored retirement plans.
Another is the Automatic IRA Act of 2024. The proposal would require employers with more than 10 employees that do not sponsor a retirement plan to automatically enroll their employees in individual retirement accounts (IRAs) or other automatic contribution plans like a 401(k). Smaller employers would be eligible for an auto-IRA tax credit to offset the costs.
Auto-IRA programs are already running in eight states, including California, Colorado, Connecticut, Illinois, Maine, Maryland, Oregon, and Virginia. Further, Massachusetts offers a multi-employer plan. In addition, 10 other states are at various stages of implementation.
“We have worked with 19 states to create programs to make it easier for people whose employers don’t offer a retirement plan to be able to save for their future, but about two-thirds of states have yet to act, and we await action from the federal government,” LeaMond said.
