Do Americans have a saving problem for retirement? Many Americans do not have enough savings ever to be able to retire comfortably. The median family of retirement age has $12,000 in savings. Using the 4% safe withdrawal rate, that’s only $40 per month in retirement income. That is a terrifying figure to remind younger people to save for retirement.
About 70 percent of Americans have access to to retirement accounts through their employers, but just over 50% take advantage of the retirement saving plan. To this segment of population that has access to retirement accounts, the average American household has just about $100,000 in 401(k)’s and IRA’s.
The U.S. Census Bureau reported in September 2016 that real median annual household income was $55,775 in 2015. To be financially secure in retirement, retirees would need about six to eleven times annual earnings. Given that retirement saving is nothing other than giving up money during one’s working years to be able to spend more in retirement. So how will Americans with low savings survive in retirement?
The savings-poor households can still thrive in retirement. Many of them depends on Social Security and state pension for monthly incomes. Older retirees could also rely on other family members to avoid the retirement crisis.