In today's column, I'd like to talk about the lack of savings plans within American households.
According to the Center of Retirement Research, 53 percent of Americans households are "at risk" for not having enough money for retirement to maintain their standard of living. For all you non-math wizards, that's more than half. Here is another mind-blowing statistic; more than a third of workers have less than $1,000 saved up for retirement (not counting pensions and home equity), while 60 percent have less than $25,000 saved up.
If you're wondering how this can be, you're not alone. The lack of savings has been a problem for this country for quite some time now. In 2005 the personal savings rate was just 1.5 percent in the United States. In 2013, it was 2.2 percent.
If you just look at the numbers, you might think that for some reason we just don't care about our financial futures. Is it because everyone believes that someone else will take care of them? Does everyone except me have a very wealthy uncle who will swoop in to save the day?
Maybe we are all counting on the "Powerball" retirement plan. After all, the average American household spends $1,000 per year on lotteries. Even though your chances of winning the Powerball jackpot are 1 in 175 million; which in my book, means I'm more likely to be eaten by a python snake than win the Powerball jackpot.
However, we are not alone in our quest for the Powerball retirement plan. In case you're wondering, Singapore holds the record for the highest per-household spending on lotteries, at $4,000 a year.
The cool thing about money and a free-will society is that everyone gets to decide what they do with their money, obviously after Uncle Sam takes whatever he wants. I know it's very hard to save for retirement when life keeps happening. You might lose a job, experience medical problems, go through a divorce, or just really like to live beyond your means. How can you possibly put planning for your future needs ahead of that new flat-screen TV?
The thing about saving for retirement is that you really do get quite a long time to accomplish this goal; perhaps 40 years or more. Although many excuses for not saving for retirement are legitimate, can you really come up with enough of them to cover 40 years?
If you're thinking that maybe now is the time to put a real plan in place to make sure your retirement is secure, give us a call and we would be happy to help.