Even as advisors eagerly chase the business of retiring baby boomers, a large percentage of the working population remains in the dark about financial planning, having vitually no retirement plan or savings.
According to a recent study by Thrivent Financial, a Minneapolis-based not-for-profit financial services organization, more than half of non-retired adult Americans have less than $10,000 saved for retirement.
An astonishing 36 percent of the 1,000 people surveyed had not begun saving for retirement, while 16 percent have saved less than $10,000. Apparently, many Americans simply haven’t given retirement much thought—62 percent said they’ve never tried to determine how much money they will need.
Not surprisingly, a person’s income seems to play a significant role in their investing habits. Only 26 percent of people making less than $20,000 say they’ve begun saving, while 48 percent of those making between $20,000 and $35,000 report savings. The percentage of those contributing to their savings peaks in the $50,000 to $75,000 bracket, with 87 percent saving towards retirement.
It’s a pattern that Thrivent officials find distressing, because people at the low end of the income spectrum are in most need of the planning and savings head-starts. David Rustad, a spokesman for the company, says: “Often income isn’t the problem, it’s the perceived problem.”
The study found that 54 percent of non-savers said they felt they didn’t have income to spare to savings. Pointedly, 50 percent of those in the $50,000 to $75,000 range repeated this sentiment. (The median household income in the United States in 2002 was $42,409, according to Census Bureau figures.) Rustad says the figures suggest what people need is a change in priorities and more education about their financial options.
Other reasons people sited for not saving were “it’s too early to start” (21 percent), “haven’t gotten around to it” (17 percent), and “no need to” (3 percent).