New Study Reveals Retirement Savings Gaps Among American Workers
Nick Nefos, the global head of retirement solutions at BlackRock, recently shared plans to broaden the investment options available through Varney & Company aimed at retirees.
A study has highlighted a concerning statistic: the typical American worker has merely $955 saved for retirement through defined contribution plans, such as 401(k) accounts. This sum is alarmingly low, often falling short of the recommended retirement savings benchmarks based on age.
The research, conducted by the National Institute for Retirement Security (NIRS), found that the median savings in defined contribution plans for all workers aged 21 to 64—including those with no retirement savings—was only $955 in 2023. In a stark contrast, individuals with some retirement savings saw their median contributions rise to $40,000.
Interestingly, the average balance for workers in this age group, factoring in those without any savings, stood at $93,229. Yet, for those who had saved at least $1, the average soared to $179,082.
The NIRS study also assessed how American savings aligned with the goals set by Fidelity, which recommends that individuals save three times their income by age 30 and escalates this target to 10 times by age 67.
Throughout their analysis across various demographic categories, the research revealed that no single group in the median spectrum managed to meet their retirement savings goals.
The findings also indicate that the median retirement savings rate for defined contribution plans was only 4% of the respondents’ targets. If considering net worth instead, 41% of respondents met their savings goals. Among those with positive DC plan balances, just 18% achieved their savings objectives.
Moreover, the study unveiled that men have a median savings percentage of 19% towards their goals, in contrast to women, who stand at 17%. Notably, Asian and white workers appear to have higher savings rates than Black and Hispanic workers, each at 11%.
Education level also plays a significant role in savings habits, with only 10% of workers with a high school education or less meeting their goals, rising to 26% for those holding advanced degrees.
Younger workers, particularly those aged 21 to 34, are slightly ahead with 21% of their targets saved, followed closely by the 55 to 64 age group at 19%.
NIRS pointed out that those with any retirement savings tend to be nearer to their goals than those without. Yet, the amounts for even those with savings are strikingly lower than what might be necessary for a secure retirement.
