Many Americans are in big trouble with retirement savings, according to a new report from an online real estate calculator.
The company, Clever Real Estate, says only 63% of American adults are currently saving for retirement, and 37% don't have any savings at all.
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Baby boomers who have managed to socked away some cash have only put away about $112,000 on average. That's just 39% of the $286,000 Fidelity Investments calculates they should have in the bank by age 60.
That's a big contrast to millennials, who started saving earlier than boomers and already have an average of about $70,000 in retirement savings, putting them on track to reach the $107,000 Fidelity says they'll need by age 40.
About half of Americans say they don't think they make enough money to save for retirement, and 10% say they don't think they will ever be able to retire. Gen Zers, though, were 206% more likely than baby boomers to believe they could retire before age 60.
Worse still, more than half of Americans spent some of their retirement savings during the pandemic, and one in six spent $15,000 or more from their retirement savings.
The report also found that 47% of Americans expect Social Security to be a source of retirement income. In fact, close to 60% of boomers plan to rely on Social Security entirely.
Unfortunately, the U.S. Social Security fund - unlike nearly every other government pension plan in the world - is invested entirely in low-earning U.S. Treasury bonds. And that's bad news.
Brett Arends, an award-winning financial writer, recently compared U.S. Social Security to Australia’s Future Fund, which invests in stocks, real estate, infrastructure, timberland, government bonds, corporate bonds, and so on.
Australia’s Future Fund was set up in 2006. Since then its average return has been 8.4% a year. In contrast, our Social Security fund since 2006 has earned an average of 3.8% a year. So Australians have earned more than three times as much on their money as we have over the last 16 years.
Better start adding as much as you can to your nest egg, or join the 79% of Americans who are worried they'll have to lower their standard of living in retirement. Or the 56% who believe they'll probably outlive their savings.