Financial Literacy 2007 - Retirement
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Work until you die: A new retirement goal

Saving habits: good news/bad news

Reaching early retirement goals depends on how well Americans save and plan, of course. And here, there is good news and bad.

Good news: Slightly more than a third of the people surveyed (36 percent) say they are stashing at least 11 percent or more of their gross pay in retirement savings. Of this group, nearly half (16 percent) are saving in excess of 15 percent each paycheck. That's far above the 10-percent-a-year target that's generally set by financial planners.

What percentage of your salary do you save for retirement?

Source: 2007

"It's somewhat surprising, but quite good that we have at least 36 percent saving enough to get to where they need to be. But what about the others who are saving less or zero?" says Dick Bellmer, Chairman of National Association of Personal Financial Planners.

Bad news: In fact, 28 percent of those surveyed save less than 5 percent with 16 percent saving nothing for retirement.

The most startling finding: It's mid-career individuals between ages 35 to 49 who are having the most difficult time saving.  Fourteen percent of this age group saves less than 5 percent of their gross pay, and 18 percent saves nothing. That's almost twice the amount of boomers (age 50 to 64) who set aside nothing. 

What percentage of your salary do you save for retirement? Comparison by age

Source: 2007

"This is highly consistent with a large body of research that points to some very large problems for this age group," says Merle Baker, principal of Brightwork Partners, a research firm that conducts numerous retirement studies.

There are two problems for 35- to 49-year-olds, says Baker. First, they are juggling financial demands of paying for their homes, raising children, saving or funding college tuition, and in some cases, giving money to care for aging parents. Overwhelmed with such bills, this group often puts their own retirement plans on hold.

At the same time, this group of workers is far less likely to get pension benefits from employers than older baby boomer cohorts. The upshot: despite their inability to save, 30- and 40-somethings nevertheless must rely on their own efforts to pay for life after work.

"This is the first crowd coming in who must rely on things like 401(k) savings," says Baker. "As a group, they're very pessimistic about retiring comfortably. They'll tell you what they plan to do is catch up later."

That's just what many are doing. Indeed, older workers who aren't retired embrace their chance to stash away as much as possible, Bankrate found.


One in three (29 percent) of those 65 and older are saving more than 15 percent a year. That's the highest rate for any age group, although the survey base size for this group was small. And an additional 15 percent of those who are at least 65 sets aside 11 to 15 percent of their income. Among 50-to-64 year olds, 23 percent save more than 15 percent of their income while 20 percent save between 11 to 15 percent. 

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