Americans are not saving enough for their retirement and those who do are not sure what they are doing, according to the latest data from the Federal Reserve.
More than a third of non-retired Americans say their savings are on track, but a quarter do not have pensions or retirements. But saving is not the only problem, the administration of those assets is also a problem for Americans, according to the Report on the Economic Wellbeing of American Households in 2018 (but published this week). Six out of 10 Americans with a self-directed retirement account, such as a 401 (k) or individual retirement account, are not comfortable with managing investments, and many had difficulty with financial education questions.
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The Federal Reserve report surveyed more than 11,000 Americans. It is important to keep in mind that these answers are self-evaluated, which means that these non-retirees may be better or worse than they think. Industry experts say that more impartial research should be done with respect to retirement, but any substantial study or survey helps to give an idea of how people approach or live in the next phase of their lives.
The perception of being prepared for retirement increases with age, even if they have little or no stored assets. About 17% of Americans 45 to 59 years old do not have retirement savings, but 42% of them said they were in the process of retiring; 13% of those over 60 reported that they had no savings, but 45% said they were prepared.
Here are some more findings from the Federal Reserve report:
More than half of the participants said they save for retirement in a defined contribution plan, such as a 401 (k) and a third said they use an IRA. A quarter of Americans said they have a pension. But 42% said they are saving on a non-retirement account, 14% said they use real estate to save, and 7% said they do business.
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"On the road" meant different things for various age groups. For those 18 to 29 years old, preparation for retirement had $ 10,000 or more (22% said they had); for the group of 30 to 44 years old, it was $ 100,000 (which also only 22% said they had); and for participants 45 to 59 years old, preparation for retirement had $ 250,000 (what 27% said they had). The actual number that someone needs for retirement depends on numerous factors, including housing, location, transportation, lifestyle, travel and medical care. Some financial experts will say that to retire you need millions, while others may suggest the use of simpler rules, such as saving 10% of your salary.
Financial education is low among all Americans, and it is no different when considering retirement. Workers may be asked to choose investments in their portfolios, but many are not sure how much of each security to invest and what are the best options for them in the long term. Male participants seemed more comfortable investing their retirement accounts than their female counterparts, regardless of their level of education. For the part of the financial education survey, responses ranged from 42% to 70% correct: fewer people knew which asset normally gave the highest returns over a long period of time (shares), but many knew that $ 100 in one savings account with 2% Interest would earn more than $ 102 after five years.