Have Americans Given Up on Saving for Retirement?

Americans have reached a new level of futility in planning for their retirement. Many say there is no point in saving with interest rates so low and future health costs so high

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In the wake of the Great Recession, retirement-minded Americans are feeling an unprecedented amount of futility. They are undersaved and — worse — see little reason to do anything about it.

That’s the alarming conclusion in a new report from the Deloitte Center for Financial Services, which found that 60% of preretirees believe health care costs will consume their savings no matter how much they save. Similarly, 39% believe investment returns won’t be high enough to provide decent retirement income regardless of how much they manage to put away.

Deloitte found exasperation at every turn: 58% don’t have a retirement plan; nearly 40% don’t know what an annuity or mutual fund is; and 20% expect to rely purely on Social Security for their retirement needs. More than half don’t trust anyone’s advice.

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Collectively, we seem to be throwing the towel. It’s not difficult to understand why, to be sure. After a sharp pullback in 2008 and ’09, stocks are only now touching levels they first reached in the late 1990s. So the market has been dead money for nearly 15 years if you bought then and simply held on. A lot of folks who were on track with savings at, say 45, have fallen way behind and now they are 60. This helps explain why so many boomers now plan to work past their normal retirement age of 66 or 67.

Meanwhile, housing is finally making a comeback. But real estate values in most markets are nowhere near the levels seen in 2007. And historically low interest rates are behind the spreading feeling that decent retirement income is a pipe dream.

The high cost of health care, and slowly disappearing coverage for retirees, further fuel the growing sense of retirement futility. Extend Health found in a survey that adequate health insurance coverage was retirees’ top concern and that the share of those worried about “having enough money to pay out-of-pocket medical expenses” had doubled in the past five years.

One out of two workers says they will delay retirement solely to keep their health plan, reports the Employee Benefit Research Institute (EBRI); 1 in 4 says they would retire earlier than currently planned if they were guaranteed access to health insurance.

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Only 18% of workers are employed at firms that offer health coverage to early retirees, down from 29% in 1997, EBRI reports. Between 1997 and 2010, the percentage of retirees over age 65 with retiree health benefits fell to 16% from 20%.

With an economic recovery under way, and housing rebounding and stocks verging on new highs, perhaps the sense of futility will ease before we all slip into a coma. Let’s hope so, because giving up isn’t the answer.

48 comments
mariambeall
mariambeall

We started putting away for retirement at 21.  We are now in our 40s.  We have 4x the amount in retirement than people our age.  And I know it's not enough.  I work part time so that I can manage the house, kids, finances while my  husband works.  We try to stay debt free.  Our house will be paid for in our 50s.  Our retirement program will have 4 or 5 parts to it:  Investments/401ks/IRAs, part time work, social security (don't expect much but expect something), be debt free and if need be, rent out a room.  As a health and fitness specialist, I know that good health is very important in the ageing process.  Unfortunately people do not prioritize their health.  I have been in the industry 25 years and people constantly make excuses when it comes to exercise and eating healthfully.  So, if I can help anyone know what they should prioritize, it's good health.  When you achieve that, you will save on healthcare, be able to work part time when you age and enjoy your life...peace!

Lawrance.Jackson
Lawrance.Jackson

People who are planning to retire must have retirement planning well before they are planning to retire. They must plan it at least 5 to 10 year early to mak their retirement life more comfortable and wealthy rather than thinking negatively.

WilliamJMcBurneyJr
WilliamJMcBurneyJr

Tell the elected officials in Washington what you know and what they should do about it.

xwagner76
xwagner76

>With an economic recovery under way, and housing rebounding and stocks verging on new highs

Whoa, whoa, whoa, there, little fella... "economic recovery under way" How do you figure that, exactly? Just more blue-sky happy talk? Housing rebounding? Not around here, it isn't. And "stocks verging on new highs" -- microtrading. The stock market is NO PLACE for an individual investor. It's a scam. 

Want to put the US economy back on its feet? End the "Federal" Reserve, fold it into the Treasury Department and thoroughly audit the "Fed" over the past hundred years. A private central bank benefits no one other than the central bankers.

BTW has even one single "too big to fail" banker been indicted or prosecuted for gaming and crashing the US economy? Even one?

hummingbird
hummingbird

I've come to the conclusion that our leaders have turned this country into some kind of second-rate nation. We don't seem great anymore when you see how many children/people are hungry, homeless, unemployed, without health insurance and a retirement plan. The average Canadian is now richer than the average American. Many of us standard of living has fallen greatly.

ruraynor
ruraynor

Please, please, PLEASE can people stop perpetuating the myth of a home as an investment? When you treat housing like that, it becomes unaffordable to young people like me, then all you do is whine and moan that we never move out and we're taking up your house! You're robbing your children and then complaining when they're poor.

cshelton052069
cshelton052069

I had to cash my 401K out in order to stay in my home a few years back.  The problem for so many is that trying to make ends meet presently takes priority.  And I can't be more sick and tired of all the lecturing on this subject.

dragram
dragram

Another issue is that even with health care some treatment is not covered.  My mother has two different health insurance companies, and will retire with health insurance. Yet, when she had to stay overnight for observation after a fall, the insurance company is sticking her with the 8k bill.

JeromeBarry
JeromeBarry

I guess I'm in the minority.  Working, saving, getting good growth in my retirement account, and getting good yield in my investment accounts. The alternative to having a plan to live is to plan to die.

SFMichele
SFMichele

Older folks might think about cautiously contributing once again to their 401 (k)s and IRAs, but many of them no longer even have jobs! With age discrimination a given, they've lost jobs, can't find new jobs and "early retirement" is now a fact for many over the age of 50. So being able to contribute to a retirement account is just a dream. 

DanaHowell
DanaHowell

My nearest state school says that with in state tuition a 4 year degree costs $100,000. I have two kids. How am I supposed to save anything after paying that?

em4rtz
em4rtz

Honestly they need to do something about health care costs. Time had a great article about it recently and how these absurd prices for services are basically made up out of nowhere and the guys at the top are just raking in the cash. We should be discussing ways of fixing this before healthcare does more harm than good.

phankane
phankane

Several of my friends are factory workers their 401K are managed by the sharks, the more they put in the more they lost while the sharks are getting richer. In the end they cashed out their 401K and buy a shiny new car!


ionotter
ionotter

Sounds like everything is proceeding according to plan.

hanrod1
hanrod1

No, giving up is not the ENTIRE answer; forcing the government to contest the domination by corporations and other multi-national orgs, etc., and A NEW NEW DEAL -- THAT IS THE ANSWER! Let us see how the U.S. economy does when we go on a national strike, or when there is major violence and disobediance in the streets!

bellaluna30
bellaluna30

Maybe because we're too busy trying to survive from day-to-day?

antonmarq
antonmarq

Maybe because, It's a scam. 

BorisIII
BorisIII

Baby boomers in general wanted free hand outs when they where young and not making much money.  Then they got older and did't want to give any money to the poor.  So they could spend it all on themselves.  And now they are retiring and getting poor again and they will vote for free handouts all over again.  Theres just too many of them and they have all had too much control of voting for the countries best interest.  They have always been spoiled and they aren't going to stop.

financeboomer
financeboomer

I think this survey brings up a lot of the frustrations that Baby Boomers have.  However, most are hard working and resourceful and will do their best to help themselves.

It would be nice if politicians dealt with legal costs driving up healthcare costs but that has been swept under the rug.  Also, improving financial market regulation so that our investments have a reasonable chance of having some return needs to be addressed.

Helen

Boomers, Markets & Money 

mppetemg545
mppetemg545

Why save for retirement when Obama and the rest are wanting to take the funds.  Why save for retirement when Obama may not want us to live to old age.

bellaluna30
bellaluna30

@xwagner76   Like your choice of "little fella" - it's much less offensive than my use of "Skippy."  I also like your point of view.  It's bang on for many more than anyone would care to acknowledge.

MM2222
MM2222

Yeah, but this is also b/c Americans want their cake and to eat it too (and I'm American). No one really saves, then complain when they're broke/in bankruptcy. I work overseas and took a smaller paycheck... but my healthcare costs are low but still exceptional quality, meals are cheaper, transport cheaper, etc.  And I'm in S.E. Asia, so TRUST ME AMERICA, you ain't seen "hungry, homeless, unemployed" til you leave the 1st World!!!!

bellaluna30
bellaluna30

@cshelton052069   You are so painfully correct.  We had to cash out our 401K to keep a roof over our heads (rental) and relocate to a more affordable location.  It.  SUCKS.

MM2222
MM2222

You are in the minority, Jerome, cause you SAVED. And prob. a lot more than what most Americans did/have. I'm 28 years old and have more liquid assets than my 50 year old relatives. Scary.

raidx259
raidx259

@JeromeBarry I'm also like Jerome. I'm saving, getting good returns, etc. But unless you retire a multi millionaire ( $2 -$5 mm), or you have great genes, chances are your healthcare costs will consume whatever you put away. I think that's the point of the article. The sense of apathy that there is little the average guy can do to adequately prepare for old age.

The irony is that we have been able to extend our lives through advances in healthcare technology, but at the same time we can't afford it.

josht
josht

@DanaHowell  Send them to another school? I don't understand why that is rocket science...

xwagner76
xwagner76

@em4rtz How is it virtually every other developed nation on Earth provides health care for its citizens, but not the USA?

BobJan
BobJan

@em4rtz They are discussing costs, Health Insurance and the Congress vacationing in the Bahama's. Guess what's going to happen?

NaveedXVO
NaveedXVO

@phankane They should just manage their own 401ks.....At least with a little research they wouldn't lose too much

BobJan
BobJan

@hanrod1 Jimmy Hoffa brought the country (Teamsters) to a halt and the country listened. That's why the republican party hates unions. And the republican robots do too.

whoayou1
whoayou1

@BorisIII Your parents who made you are probably boomers. What is a hand out  anyway? Most "boomers" I know still work!

BobJan
BobJan

@BorisIII Are you from the Mormon planet "kolab" ? That's where they think that everyone is a taker unless they have wealth of at least 200 MILLION.

antonmarq
antonmarq

@BorisIII I must admit, your response is way up there with the most anal responses ever. Maybe, if you ever had a baby boomer parent (hmmm), the sacrifices they made to bring you into this world, has now been seriously questioned. 

antonmarq
antonmarq

@mppetemg545 What??? Keep this in mind, the retirement plan got wasted during the GWB years. You remember, don't you. The period where this country went from riches to rags because of an aimless president who created two aimless wars, and the wanted a library built to commemorate his ignorance. 

DanaHowell
DanaHowell

@josht @DanaHowell You are aware of the price of gas these days? My kids are going to the closest school where I can pay in state tuition.

josht
josht

@NaveedXVO @phankane  Or just get out of the 401k plan in general. The only benefit is the match, and in my opinion taxes are going up, so by the time you pay your taxes you will wipe out your match.

SFMichele
SFMichele

@NaveedXVO @phankane This is a good idea, maybe, if account holders are savvy, educated, and have time to make adjustments and so forth, but requires much change in legal regulations. Good luck with that. 

BobJan
BobJan

@antonmarq @mppetemg545  2 wars, 2 tax cuts, humongous drug giveaway plan, TSA and Homeland Security.   All of it unpaid for, unfunded and left for the next guy who everyone blames for all that happened before he got in.

mppetemg545
mppetemg545

@antonmarq @mppetemg545 President Bush was not aimless.  Right after 9./11 it was a popular war and the politicians went with it to revenge the lives that were lost that day.  That was the day when the war was popular.  Then when people forgot about the attacks the politicians turned.  

Also Remember how Clinton wanted people to own their own homes whether they could afford it or not.  Remember how Clinton deregulated Wall Street.  Remember how Clinton lied when he stated we had such a surplus.  How could we go from an extreme deficit to an extreme surplus.  So do not tell me that President Bush was aimless when nobody wanted to work with him.  What a pity on your part.

MM2222
MM2222

Do what my parents did. Have your kids pay for it, or at least some! I paid all $70k of my debt myself and got a job, paid it all off, and save money yearly. Yup. Hard work can pay off!!

raidx259
raidx259

@RealThought @mppetemg545 @antonmarq Did GWB actually force anyone to sign a purchase agreement for a home? Everybody did it willingly. If you don't know that a house is an investment that can go up or down; if you don't know that pulling equity from your home to make frivolous purchases is not the way to go; if you don't know what you can or can't afford, then who's problem is that?

Aren't we all responsible adults here?

BobJan
BobJan

@mppetemg545 @antonmarq GW Bush was not aimless, just plain dumb. Clinton had a Republican Congress to help him out with all the crazy stuff Wall Street wanted. Does the name Phil Gramm ring a bell? He was the Republican that said "Wall Street is holy ground". I'm still laughing at that one. Nobody worked with GW Bush, are you kidding me. He had a Republican Congress for 6 years. They worked with him all right. Look what happened. 2 wars, 2 tax cuts, humongous drug giveaway plan, TSA and Homeland Security. All was unpaid for, unfunded and then left for Obama to deal with. Is this Rip VanWinkle and you fell asleep for GW's 8 years as president?

RealThought
RealThought

@mppetemg545 @antonmarq  

Bush was the guy who pushed home ownership, from 2002 through 2008. It's in many of his speeches, most of his major ones. Search Youtube for "bush home ownership" for the video.

9/11 was in 2011, and he didn't start the war with Iraq until 2003. It wasn't popular, never was, but they positioned it as "you're a traitor if you disagree". 

You don't remember all of this?