Investing Blog

American Middle Class Savings by Jordan at Investing Blog

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I recently wrote an entry that centered on the average American net worth by income and age. What I found was shocking; very few Americans have much more than a few thousand dollars saved. Even scarier is that seniors are going into retirement with less than $200,000, on average, only increasing the future strain on social security and limiting the opportunities for new solutions.

I thought that following the worst recession since the Great Depression we as a country might have a change of heart. If we have, it isn’t yet obvious.

New data suggests that middle class Americans agree that $300,000 will be enough to fund their retirement, but have saved only $20,000 to that end. $300,000, most agree, is the amount that is suitable for a part-time retirement, working less than full time to supplement investment income and maintain a similar standard of living.

The middle class, as defined by this survey, is made up of people 25-69 with household income ranging from $40,000 to $100,000 for the 30-69 group, and income of $25,000 to $100,000 for those 25-29. For the sake of statistical fairness, it is important to note that no one with more than $100,000 in investable assets was considered “middle-class,” which helps to explain, at least in part, why savings are so behind the curve.

Demographics of the survey shed light on how concerning the numbers have become. Those aged 50 to 59 have saved only $29,000. Interestingly, with so little saved, only just over one-third of participants believed they would have to work during retirement. With only $29,000 saved through more than 30 years of work, it can be said that without a doubt, most will have to work through retirement.

Confidence in Social Security waned as respondents grew younger. From 50 to 59 years old, 77 percent believed their retirement would be subsidized in part by Social Security disbursements. Respondents in their thirties showed a different response, with only 22% believing they would see Social Security benefits.

Financial Literacy Biggest Challenge

The overwhelming majority of survey participants noted that they need help in planning for retirement, and deciding how much money and what investments will get them to their goal. However, few were willing to pay for such advice, with more than two-thirds saying they wouldn’t pay for retirement help.

Conclusion: Americans have a savings problem they aren’t willing to admit and an education problem they won’t pay to fix. Not good. And while I’m generally critical of financial planners, if you don’t know what you’re doing, by all means, hire one.

About Jordan

Jordan is the web master of www.investingblog.org, a site dedicated to skillful investing, news and recent trends. You can read the original article here.

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