Two-thirds of middle-income American workers are saving less than 5 percent of their annual income for retirement, a new survey reveals.
LIMRA unveiled this finding in a summary of results from a new report on savings among middle income American workers, defined as those with incomes varying between $40,000 and $99,999 annually.
The report reveals that a quarter of middle-income American workers are not saving, and 85 percent are saving less than 10 percent of their income for retirement, the survey reveals.
The largest age group that reports not saving for retirement are those ages 55 and over (26 percent)—individuals within 10-15 years of retirement.
One in four workers ages 18-34 reported not saving for retirement. While more workers age 35-54 report saving some percentage of their income for retirement, almost one in five are not saving for retirement, the report adds. Yet 80 percent of the survey respondents say they need to save more to be on track for retirement, with a quarter of Americans saying they need to save an additional 15 percent or more of their income annually.
Older workers (age 55-plus) and women, who represent the highest level of non-savers, are most likely to think they need to save at least 15 percent or more.
“While current economic conditions are clearly challenging Americans’ ability to save for retirement, savings habits have not changed significantly over the past two decades,” says Matthew Drinkwater, associate managing director of LIMRA's retirement research. “Over this period, employer-sponsored retirement plans have continued to transition from defined benefit plans managed by employers to defined contribution plans where workers are fully responsible for their retirement funds.
“Our research indicates that workers still need more education and guidance to help them make the right decisions to ensure they have sufficient savings for retirement,” he adds.