SAN FRANCISCO, June 24, 2014 /PRNewswire/ -- Full-time employees in the United States are saving too little to maintain their quality of life in retirement, pushing more to plan to retire in their 70s, a recent FutureAdvisor study shows.
FutureAdvisor's Retirement Pulse, a detailed survey of full-time employees in America taken in the first half of 2014, shows the labor force's savings rate is still too low for many to receive a decent income in retirement.
Of the five income brackets surveyed, middle-class income earners with $50,000 to $100,000 in annual salary save just 4.5% of their wages -- less than half what they will probably need. While recommended savings ranges from 10% to 15% of income, Americans' savings rates have been declining since the 1970s.
As a result, more and more Americans are planning on retiring later than ever before, with one in four saying they plan to retire in their 70s. While this is consistent with increased life expectancy, and may be seen as progress from a policy angle, the impact of delayed retirement on quality of living has yet to be determined.
Two-thirds of the employees surveyed understood they need to save at least 10% of their income to retire decently, but the survey revealed a behavior gap, with the average employee saving just 5.7% of income.
In addition, many savers were misallocating their investments, with one in five saying they believed cash was a good asset to invest in, even though its long-term returns have historically been poor.
This can be at least partially attributed to the lack of proper financial advice most Americans face. Only 29% of respondents had used a paid financial advisor, with most relying on their own reading and research, including friends and family.
Overall, the picture was one of Americans not saving sufficiently for retirement, and investing what they saved poorly, despite awareness of the need for retirement savings.
The full survey report is available for journalists here.
- Retirement Benefits
- Investing Education