Financial Literacy 2007 - Retirement
A cartoon man in red carrying a large compass with a blue and purple background
Work until you die: A new retirement goal

The mantra of saving early is sticking

Younger workers are faring astonishingly well, too. Although they can still amass large fortunes by saving even a modest amount while they're in their 20s, plenty seem committed to stashing as much as possible.

Nearly half -- 46 percent -- of workers between the ages of 25 and 34 save in excess of 11 percent of their salaries, with 15 percent of this group setting aside more than 15 percent. Among the youngest individuals (18 to 24 years old), 4 percent hit the high mark by saving 15 percent and a respectable 12 percent stashes 11 to 15 percent of pay. Even though this group was a small percentage of our survey group, the news in encouraging.

"They're getting the message. With the 18-to-24-year-old group, they're just out of college and already saving money. And the 25-to-34-year-old group already has a good head-start. If they keep that up, by the time they're 50, the implication is they will be very well off," says Brian T. Jones, CFP and author of "Getting Started: The Financial Guide for a Younger Generation. "

Moreover, it's not just young, highly compensated Wall Street cowboys who are saving. A great number of modestly paid employees -- again, many of whom tend to be younger -- are just as apt to set a great deal aside.

Roughly three in 10 of those earning $20,00 to $29,900 say they save 11 percent or more of their income annually. An additional 27 percent of that group saves 5 to 10 percent of pay. Nineteen percent of those earning less than $30,000 save nothing.

Those who fare the worst earn less than $20,000 annually. Among them, four out of 10 save nothing. Yet what may be among the most impressive findings of all is that 19 percent of those with gross yearly pay under $20,000 manage to save 11 percent and more. (This group was a small base size in the survey.)

Do you think your life will be better, worse or about the same when you retire?

Source: 2007

"They're not hitting peak earnings years, but if they get a company match then they'll be well into the teens," says Jones. "Retirement won't be as dreary as everyone says it will be."

Age drives retirement expectations

Even when savings levels are modest, optimism about retirement ranks high.

When asked "Do you think life will be better, worse or about the same when you retire?" -- a whopping 38 percent said they expected better things to come. An additional 41 percent said life should be about the same. And only 18 percent saw life getting worse.


But yet again, age, more than any other factor, drives expectations. Younger and even lower-paid workers report to be far more bullish about their future than older, better-paid individuals. Specifically, 44 percent of individuals 18 to 49 expect life to be better. That's almost twice found in the over-age-50 group. (Among them, 24 percent expect things to improve when they retire.)

Show Bankrate's community sharing policy

Connect with us