March 25, 2024

South of the border, Americans are saving for retirement – they just don’t know how much they need

The good news south of the 49th is that our American friends have generally opened retirement accounts and started saving.

But the bad news, reports the TIAA Institute via a media release, is that many Americans “don’t know how much they’ve saved.”

“Large majorities of Americans of all races and ethnicities think about retirement in similar ways, calculating how much money they’ll need and how long they have to save it. But the similarities end there, as gaps emerge in savings rates, confidence in their retirement plans and other key measurements of retirement readiness,” the release notes.

The findings of TIAA’s State of Financial Preparedness report “raise questions about whether coming generations of retirees will enjoy financial security, particularly as lifespans continue to lengthen and a retirement crisis already exists,” the release notes.

Here are some of the key findings, via the media release – all figures are in U.S. dollars.

  • “Overall, two thirds of Americans (67 per cent) have at least some money invested in retirement accounts, but close to one in four don’t know how much they’ve saved. That’s true for 24 per cent of retirees and 22 per cent of those planning to retire.

    More than seven in 10 whites (76 per cent) and Asian Americans/Pacific Islanders (71 per cent) have retirement accounts, but that’s true for only about half of Black (49 per cent) and Hispanic (52 per cent) Americans. Many Hispanic (37 per cent) and Black Americans (28 per cent) who have not yet retired are unsure of how much they’ve saved, underscoring the significance of the uncertainty.
  • Fewer than half (47 per cent) of those not yet retired are “very” or “somewhat” confident they’ll retire when planned. Those with the lowest confidence rates are Hispanic Americans and people ages 22-34 (each 37 per cent).
  • Roughly 30 per cent of whites and Asian Americans/Pacific Islanders have saved at least $250,000 for retirement. That’s almost twice as many as the number of Hispanic (17 per cent) and Black Americans (16 per cent). 
  • One-fourth (26 per cent) of Black Americans expect they’ll need some kind of paid employment for income during their retirement. That’s at least 10 percentage points higher than any other race or ethnicity.

“We’ve long talked about retiring inequality, but this new data does more to identify gaps, challenges and opportunities,” states Surya Kolluri, head of the TIAA Institute, in the release. “If most people are planning for retirement but can’t follow their plans, that’s a call to action for employers, policymakers, financial advisors, retirement services providers and others. We need to better identify the steps we must take to give people the resources they need,” states Kolluri.

The release notes that a worrying “40 per cent of U.S. households already risk running short of money in retirement.” Forty-four per cent of those surveyed have less than $50,000 saved for retirement; 19 per cent have saved at least $500,000, the release adds.

If there’s a takeaway from this research that’s helpful for all of us here in Canada, it may be the idea that you should know how much you’ve saved, and then as well have a general idea of what you’ll need as income when you’re retired. That means having a sense of how much you’ll want to receive from government retirement benefits, workplace pensions, and your own savings.

If you haven’t got started on the whole retirement savings thing, check out the Saskatchewan Pension Plan. With SPP, you can contribute in many ways – via online banking, pre-authorized contribution, and even via credit card. The money you send SPP is then carefully invested in a professionally managed, low-cost pooled fund with an enviable track record.

At retirement time, you can convert your savings into monthly income for life via an SPP annuity. Alternatively, you can take advantage of SPP’s Variable Benefit and take out what you need when you need it. Check out this made-in-Saskatchewan solution for Canadian retirement savings today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

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