Americans are Saving Too Little, Too Late for Retirement
February 28, 2002
There is a disconnect between Americans' recognition of the need to save for retirement and their behavior, according to the 12th annual Retirement Confidence Survey released at the 2002 National Summit on Retirement Savings in Washington, D.C.
According to the nationwide survey -- which was sponsored by two nonprofits, the American Savings Education Council (ASEC) and the Employee Benefit Research Institute (EBRI):
- Some 70 percent of people say they are confident they'll have enough money to live comfortably in retirement.
- But half of workers have saved less than $50,000, and 15 percent say they've saved nothing.
- Even among Americans closest to retirement, those ages 40 to 59, just a quarter have saved $100,000 or more.
Many who don't save don't understand that even small amounts put aside regularly can yield big returns because of the benefits of compound interest, according to Don Blandin, president of the ASEC:
- For example, that a person who saves $10 a week for five years in an account earning 5 percent interest, then increases that to $20 a week for the next five years can accumulate nearly $10,000 in a decade.
- Increase the savings rate to $40 a week for the next 35 years, and the saver will end up with more than $250,000 - $80,600 invested and more than $170,000 earned in interest.
ASEC and EBRI are also sponsors of a savings education program called "Choose to Save," which notes that less than half of workers have any idea how much they need to save for retirement.
Source: Eileen Alt Powell (Associated Press), "Confidence, Savings Rate Don't Match," February 27. 2002.
Browse more articles on Economic Issues