More Americans worry about having enough money for retirement than they do about any other financial concern, according to a survey conducted by Gallup earlier this month.
Overall, 59 percent of people said they were very or moderately worried about retirement planning. Second on the list was a related concern: not having enough money to pay medical costs if they faced serious illness, with 53 percent of people worried about that. The percentages were even higher for those approaching retirement.
The picture improves for those 65 and older, with only 37 percent worried that they won't have enough money for retirement and 43 percent worried about the impact of a serious illness.
401(k) participation, low-income individuals age 50-58, 1992-2010
|Condition||Under 300% of poverty line|
|Individual is working||42%|
|Firm offers 401(k) if working||x 44%|
|Worker is eligible for 401(k) if firm offers||x 84%|
|Worker takes up 401(k) if eligible||x 78%|
|401(k) pension participation||= 12%|
Source: Center for Retirement Research at Boston College
None of this is anything new, Gallup points out. Retirement shortfalls and disastrous medical costs have topped the list of American worries since 2001, the pollster says. The Great Recession exacerbated the problem, with the percentage of people concerned about these issues hitting a high point two years ago. While people aren't as worried as they were then, they are still more concerned about retirement and extraordinary health care expenses than they were before the downturn, according to Gallup.
Solution is simple
What can we do about it? For one thing, we could encourage people to save more. The Center for Retirement Research at Boston College took a look this month at pensions and pointed out that about 50 percent of workers in the private sector don't participate in a retirement plan of any kind at their jobs. Among people between 50 and 58 years old whose household incomes are less than 300 percent of the federal poverty level -- $47,190 for a family of two in 2014 -- only 19 percent participate in a pension plan.
- In order to participate in a workplace pension plan, you have to have a job.
- People who earn low incomes often work for employers that don't offer pension plans.
- Those who do work for companies that offer pension plans may not be able to participate because they work part time or they haven't been with the firm long enough to qualify.
- Since 401(k)s are optional, workers who don't make much money, don't have much education, or both, often don't sign up.
Based on this, the center concludes, "The most potent approach for boosting pension participation would be requiring employers to offer all workers access to a retirement saving plan that includes auto-enrollment."
What about those who aren't working? "Tackling this thornier issue would require measures to boost employment," researchers say.
What do you think? Should the government mandate some sort of widespread savings plan beyond Social Security?
In other retirement matters, consider these six reasons to love a Roth IRA.