Experts have long warned that the United States is headed for a retirement crisis. New research shows just how dire that crisis could be.
The problem is not just that Americans aren't saving enough for retirement. More than one-quarter of them have no retirement savings at all, according to a new study by the personal finance website
The study surveyed more than 1,000 U.S. adults about their long-term savings, and the results were alarming: 28% had absolutely nothing saved for retirement. Not surprisingly, 30% doubted they'd ever be able to retire.
It's a predicament that many financial advisers are all too familiar with.
Read more:
"When individuals find themselves inadequately prepared for retirement, they confront limited options," said Ashley Folkes, founder of
This lack of retirement readiness
Taken together, those age groups largely cover Generation X, which was
But this was far from the only generation to fall behind. Twenty-eight percent of Americans aged 18 to 24 had nothing in their nest eggs, as did 25% of 55-to-64-year-olds.
How could so many people have no long-term savings? One answer is that a shocking 39% of Americans aren't contributing to a retirement plan, according to the study. This, too, varied by age — 43% of
Access to retirement plans
Read more:
But there are also other reasons why so many American piggy banks are empty. Wealth managers who have encountered this problem point to a number of cultural and economic maladies.
"The high cost of living is responsible for a lack of retirement savings," said Noah Damsky, a principal at
Others find that clients have other, more urgent bills to pay off.
"I see this all the time in doing pro bono work," said Jonathan Swanburg, president of
In addition, some believe American culture encourages spending more than saving.
"Our society thrives on instant gratification, bombarding us from all angles," Folkes said. "This phenomenon often leads to lifestyle inflation, where our spending escalates in tandem with our earnings, resulting in a higher standard of living but insufficient savings."
Read more:
Breaking that habit requires building better ones. Fortunately, that's something advisers can help with.
"The solution has to start with budgeting," Swanburg said. "Once the person can get out of debt and build up an emergency reserve, then they can start saving for the long-term. And by getting their budget in order, they will likely have reduced their expenses where they don't need as much to one day retire."
This article originally appeared in Financial Planning.
