Study: Only Half of Americans Planning for Retirement

Many lack a retirement plan at work and have little ability to save

By + More

For workers without a traditional pension, retirement is a do-it-yourself affair. But the majority of Americans have not done any retirement planning, according to research released today. Only 42 percent of working Americans have ever tried to figure out how much they need to save for retirement, the survey conducted by the Treasury Department, President’s Advisory Council on Financial Literacy, and the FINRA Investor Education Foundation found. Even among those closest to retirement, just 51 percent of Americans between the ages of 45 and 59 have attempted to calculate how much they must accumulate.

[See America's Best Affordable Places to Retire.]

The telephone survey of 1,488 Americans found that only half of respondents (51 percent) have a retirement plan at work. Even fewer people (28 percent) have retirement accounts outside of their workplace plan. Among those who have a retirement plan through their employer, most people reported having a 401(k) or similar retirement account (72 percent) that requires the individual to make investment decisions.

Most respondents (79 percent) said they regularly contribute to a retirement account. About half (46 percent) of the retirement savers reported investing in stocks, bonds, mutual funds, or some combination of the three. However, a sizable portion of these investors could not describe how their retirement assets were invested. For example, 17 percent of the survey respondents did not know whether their nest egg was invested in stocks or stock mutual funds and 37 percent were unsure if their assets were invested primarily in a life-cycle or target-date fund.

[See Is Retirement a Right or a Privilege?]

Many workers also said they did not pay attention to their annual statements from the Social Security Administration (SSA) outlining their expected retirement benefits. While 66 percent of individuals who are not yet retired acknowledged receiving the statements that SSA has been mailing to workers since 1995, most said they did not use the information to make decisions about when to retire or sign up for Social Security benefits.

[See 10 Sources of Retirement Income.]

Retirees in the survey say they rely primarily on Social Security (81 percent) and traditional pension payments (63 percent) to pay their daily living expenses. Far fewer retirees finance their retirement using withdrawals from savings (26 percent), dividend or interest income (23 percent), wages (17 percent), rental or real estate income (12 percent), financial support from family (3 percent), or a reverse mortgage (1 percent).