Americans dipped into retirement savings to make ends meet during the pandemic’s peak. More than two years later, many can’t afford to replenish those funds.
Inflation in the U.S. is the highest it’s been in four decades. After watching their dollars’ value shrink, workers expect to outlive their savings.
Last week, Anytime Estimate released a survey of more than 1,000 Americans. Pollsters from the online real estate research group found most are contributing significantly less to their retirement savings than before COVID-19.
Most workers dipped into their retirement funds during the pandemic. To make ends meet, 1 in 6 had to withdraw at least $15,000 from their nest egg.
Prior to the pandemic, the majority (93 percent) were paying into their retirement funds. Since? Only 30 percent are able to save for their golden years.
Income: the No. 1 barrier
Because inflation is rising much faster than most Americans’ income, it’s hard enough for families to keep up with bills, let alone their savings.
Experts recommend that people have about three times their annual income saved for retirement by the time they’re 40. Anytime Estimate says that people making around $36,800 a year should save about $572,800 before they retire.
Unfortunately, 27 percent of survey respondents said they have less than $50,000 saved for retirement. And further research shows 1 in 4 Americans don’t have $1,000 set aside for an emergency car repair or hospital bill.
Those closest to retirement aren’t doing much better than the rest of the population. Older Baby Boomers have less than half of the recommended amount saved, and since they’re so close to retirement age, they’re running out of time to make up the difference.
Anytime Estimate isn’t the only group that sees this. The U.S. Census Bureau reported that about half of adults aged 55 to 66 don’t have any retirement savings.
Retirement saving help wanted
Because it’s so hard for most people to save, employers are often expected to help out through 401(k)s and matching their employees’ contributions. That isn’t always the case, though.
“Providing a retirement savings plan and matching worker contributions is one of the best ways employers can help their employees save for retirement,” the survey says. “However, nearly 1 in 3 (31%) retirees say their company didn’t offer a 401(k) plan or pension, according to a recent survey of retired Americans.”
Betterment, an investment management site, surveyed hundreds of Americans and found that the majority think 401(k) plans make a big difference when considering a job offer. One with a matching benefit shows the company “cares about employees’ financial well-being and are willing to make an investment in their future,” Betterment said.
But nearly 1 in 3 said their employers don’t offer a 401(k) or pension plan. And even those who do have a work-sponsored retirement fund say their employers aren’t doing enough.
Americans are pulling from their retirement funds and depending on their credit cards to get by, so the answer to their savings deficit isn’t as simple as “save more!”
Don’t give up if you think it’s too late to save enough, because it’s not impossible. Whatever your financial situation is, Debt.com and other financial professionals have resources to help save for retirement – even if you’re in debt.
Find out: How to Get the Most out of Your 401(k)