Millions of older Americans are nearing retirement without a penny in savings
If you ask Americans how much they'll need for a comfortable retirement, they'll throw out a big number: $1.25 million, to be exact. But in reality, most workers are far from reaching that goal — and there's a significant chunk of older people who are nearing their golden years without a penny in retirement savings.
About 27% of people who are 59 or older have no retirement savings, according to a new survey from financial services firm Credit Karma. To be sure, that's the same share as the overall population, yet boomers have less time to save for retirement given that the generation is now between the ages of 59 to 77 years old.
The findings come at a time when lawmakers are discussing the health of the Social Security program, whose trust fund is slated to be depleted in 2033. That would result in a dramatic cut in benefits, with the 67 million retirees who depend on the program receiving only 77 cents for every $1 in benefits — a reduction that would hit the poorest Americans hardest, including those who have nothing saved for retirement.
Fewer younger workers are banking on Social Security to supply them with income in retirement, according to a separate study from Natixis Investment Managers. Only about half of millennials believe Social Security will factor heavily into their retirement plans, compared with 9 in 10 baby boomers — which indicates the older generation may be less financially prepared than younger Americans if benefits end up getting cut.
"With Social Security, you should hope for the best but prepare for the worst," noted Dave Goodsell, executive director at the Natixis Center for Investor Insight.
He added, "What people need to do, the bottom line, is take a minute to step back and say, 'What do I need to retire, what will my income be,' and then start saving."
Boomers: Dreams versus reality
Boomers say they need $1.1 million for retirement, but the median retirement savings is $120,000 for that generation, Natixis found. To reach their goal, the typical boomer would need to sock away $186,000 annually, the study noted.
About 1 in 5 people over 59 don't have a retirement account, the highest share of any generation, Credit Karma said.
The gap between their goals and the reality of their savings could explain why boomers are pushing up their retirement age, Goodsell noted. For instance, boomers now project their retirement age at 70, while millennials believe they'll step back from work at age 60.
"Boomers have been trying to adapt, and saying, 'We'll work to 70 and get more time'" to save, he noted.
Among those planning on working longer is Daniel Fitzpatrick, a senior planning executive who told CBS Evening News earlier this year that he originally expected to retire at 60. Now 64, he's still working and said he's pushing back his retirement to age 70 — and plans to work part-time afterwards.
"The benchmarks move as I get older," Fitzpatrick said.