Beach empty chairs

Content provided by Sierra Morris-Fuchs, CLS Investment Research Analyst

I have a quiz for you. How much does a typical household (ages 25 to 64) in the U.S. have saved in its retirement account? You’ve probably heard about the current retirement crises and know you should keep your guess low. How low? $2,500. That’s right, according to a study recently published by the National Institute on Retirement Security, a typical U.S. household has a mere $2,500 saved and invested. That number is grim. Ok, but that number must be skewed down considerably since only 51% of those households even hold a retirement account. If we ignore the half of the population that does not invest and save for retirement and only look at those who do, the average balance does increase, but not as dramatically as one would hope. The average retirement account balance for households that do participate is still only $50,000.

Typical Working-Age Household Chart (2)

The most disheartening of these statistics comes from those aged 55-64. These are the people who have left their overspending days behind. These are the people who have buckled down to ensure they have enough savings to last them through their days of leisure in retirement. Right? Unfortunately not. Taking a look at the chart above, this age group has only $14,500 saved on average, and of those participating in a retirement account: $104,000. Considering the fact that experts say we should have 22x our salary saved to ensure a comfortable retirement, we have a serious problem on our hands.

The chart below examines the same savings shown above, but relative to each household’s income. As the title states, close to four out five households have less than one year’s savings in their retirement accounts, and the same is true for nearly two-thirds of those close to retirement.

Nearly Four Out of Five Working Households

Statistics like these are cause for alarm. While many people will receive Social Security income, for most, that alone will not be enough. Furthermore, without reforms made, Social Security is expected to run out by 2033. The future uncertainty of this program makes it even more prudent to ensure that personal retirement savings accounts alone will be enough to get by.

But, this is why we do what we do. We are in the business of helping people, and we do this not only by managing the money that people have already saved and invested, but also through education. Just think what a dramatic difference proper financial education would make in the above charts. We have a responsibility that comes with working in finance to help others understand how to invest, manage risk, stay invested in times of stress, and find a strategy that works for them. This is why CLS places so much importance on making resources obtainable through an array of mediums to our advisors, including daily commentary; weekly, monthly, and quarterly videos; podcasts; blogs; marketing materials; presentations; and conference panels. At the end of the day, the education we and the advisors we work with provide is just as important as the services we provide, and by the looks of it, we still have plenty of opportunities to help.


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