Half of Americans say they aren’t contributing to a retirement plan, but more specifically 56% of Americans ages 18-34 are more likely to be among those not saving, according to a recent LIMRA survey.
“The findings from this survey were disturbing,” says Matthew Drinkwater, associate managing director, LIMRA Retirement Research. “Given that people will increasingly need to rely on their personal savings to make ends meet in retirement.”
He adds it was also troubling to see that a “larger portion of younger Americans — who are less likely to have a defined benefit plan — are not saving for retirement in IRAs or defined contribution plans. In order to have the adequate savings necessary to meet their financial needs in retirement, which could last 20 or more years, it is critical that these individuals begin saving systematically early in their working years.”
A quarter of all Americans and less than a third of Americans older than age 50 work with a financial professional to plan for retirement. However, those who do are more likely to be contributing to a defined contribution plan or IRA.
The findings suggest that financial professionals can have a positive influence on their clients’ saving behavior, with 70% of respondents saying financial professionals recommended how much they should save for retirement.
Younger and higher-income consumers are more likely to consider contributing to an IRA in the next year. But nearly half of all consumers say they are not planning to contribute to an IRA because they could not afford to do so.
“In the long run,” says Drinkwater, “ these individuals would benefit if they made even modest contributions to a pre-tax savings plan that could accumulate until retirement.”
