Nearly 70% of middle -class Americans say saving for retirement is more difficult than they anticipated, according to the fifth annual Wells Fargo Middle-Class Retirement study.
“Saving for retirement is a formidable challenge for middle-class Americans, with 34% not currently contributing anything to a 401(k), an IRA or other retirement savings vehicle,” Wells Fargo says.
Harris Poll conducted 1,001 telephone interviews of middle-class Americans in their 20s (ages 25-29 only), 30s, 40s, 50s, 60s and 70-75 on behalf of Wells Fargo. The survey was conducted from July 20 to August 25 this year.
Forty-one percent of middle-class Americans between the ages of 50 and 59 are not currently saving for retirement. Nearly a third (31%) of all respondents say they will not have enough money to “survive” on in retirement, and this increases to nearly half (48%) of middle-class Americans in their 50s.
Nineteen percent of all respondents have no retirement savings. And, 61% of all middle-class Americans, across all income levels included in the survey, admit they are not sacrificing “a lot” to save for retirement, whereas 38% say that they are sacrificing to save money for retirement.
“Saving for retirement isn’t easy,” says Joe Ready, director of Institutional Retirement and Trust, in a written statement. “It requires sacrifice, and it’s not something people can push off and hope to achieve later in life. If people in their 20s, 30s or 40s aren’t saving today, they are losing the benefit of time compounding the value of their money. That growth can’t be made up later, so people have to commit early in life to make savings a regular discipline year after year – it is the only way most people will achieve their financial goals to carry them through retirement.”
While a majority of middle-class Americans say that they are not sacrificing a lot to save for retirement, 72% of all middle-class Americans say they should have started saving earlier for retirement, up from 65% in 2013.
“People who have a written plan for retirement are helping themselves create a future on their own terms, with a foundation built on saving, and hopefully, investing,” Ready says.
Those who are saving say they value the 401(k) as a way to create a retirement nest egg, with 70% of respondents saying they have a 401() or equivalent plan. And, 93% are contributing to those plans.
Working longer or into traditional retirement years appears to be a predicted reality for a third of middle-class Americans who say they will need to work until they are “at least 80 years old” because they will not have enough retirement savings, holding steady from a year ago, the study finds.
Access the full results of the study here.
Written by Cassandra Dowell