Saving for retirement.
For almost 100 years when American Express established the first pension system in 1875, employers used to take care of their workers by making them contribute a small amount and then guaranteeing them income for life after they had given a certain number of years of service.
However, over the past two decades, the burden and risk of preparing for retirement has shifted from employer to employee.
Companies started offering 401(k) plans and doing away with pensions.
What was once supposed to be a supplement, the 401(k) has now become the primary method (and expectation) that people will save for retirement on their own.
What that means is that there is a looming and growing problem that most people will be unaware of until it is too late.
Don’t think so? Here is a snapshot of the average retirement savings statistics as it stands in the U.S. today. Read through them and judge for yourself:
- Median household income in the U.S.: $51,939
- The average U.S. household consumer debt profile: Credit card debt: $16,140, Mortgage debt: $155,361, Student loan debt: $31,946
- Number of Americans that year to year: 18%
- Average age of retirement in the US: 62
- Average life expectancy in the US: 79
- Average size of the Social Security check a retired worker receives: $1,335
- Amount of money Social Security will be able to pay after 2034 due to a deficit of funds: 79 cents for each dollar.
- Amount most millennials “think” they will need to retire comfortably: $2 million
- The average 401(k) balance: $91,800. For those that saved 10 years or more, the average balance was $251,600.
- The average combined IRA and 401k balance was $267,200.
- Monthly income that balance will give you (using the 4% rule): $891 (before taxes)
- Number of U.S. workers who say they will not retire until age 70 or simply never at all: One in three
- The 25-year annualized rate of return of the S&P 500: 9.62%.
- The amount of money $10,000 invested 25 years ago would be worth today: $99,368
- Average 401(k) employer match: 2.7% of pay (free money!)
Wow! Perhaps the walking dead really are among us!
Much like surviving a zombie attack, the trick to survival is to be smart and plan ahead.
By setting a goal, determining how much you need to reach that goal, and then checking in periodically to see whether or not you’re on track, you’ll be giving yourself the best possible chances for success.
Being prepared financially really doesn’t have to be complicated. Nor do you have to know any complex stock stats or special finance secrets.
If you’d like to know a whole more about building your wealth and preparing for the future, feel free to check out the wealth of articles we’ve highlighted in the Start Here page.
Featured image courtesy of Jayel Aheram| Flickr