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Workers Saving Less Than 5 Percent For Retirement

November 01, 2012

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WINDSOR, Conn., Oct. 31, 2012 — A new LIMRA study reveals that two-thirds of middle-income ($40,000-$99,999) American workers are saving less than five percent of their annual income for retirement – with nearly a quarter saving nothing at all. (see chart)

“These results, while not surprising, are very troubling,” said Matthew Drinkwater, associate managing director, LIMRA's retirement research. “Less than 30 percent of American workers have a traditional defined benefit retirement plan that could help them pay for their expenses in retirement, so the responsibility for providing the financial resources for retirement lies squarely on the individual. Many Americans will live at least 20 years in retirement, and will need significant savings to ensure their financial security.”

Overall, four in five American workers are saving less than 10 percent of their income for retirement. Most disturbing, the largest age group that reported not saving for retirement was those ages 55 and over (26 percent) – often considered within 10-15 years of retirement. One in four workers ages 18-34 reported not saving at all for retirement. While more workers age 35-54 report saving some percentage of their income for retirement, almost one in five are not saving for retirement at all.

“Optimally, all people should be saving systematically throughout their careers to ensure they can amass the funds necessary to live the lifestyle they wish in retirement,” noted Drinkwater. “Many Americans’ plans include delaying retirement or not to retire at all, but our research has found that more than half of current retirees retired before they planned – often involuntarily. It is important that Americans take the steps to prepare for every contingency while they are drawing an income.”

Most Americans understand that they need to set aside more for retirement. Eighty percent of those surveyed said they needed to save more to be on track for retirement, with a quarter of Americans saying they need to save an additional 15 percent or more of their income annually. Older workers (age 55+) and women, who represented the highest level of non-savers, were most likely to think they need to save at least 15 percent more.

“While current economic conditions are clearly challenging Americans’ ability to save for retirement, savings habits have not changed significantly over the past two decades,” said Drinkwater. “Over this period, employer-sponsored retirement plans have continued to transition from defined benefit plans managed by employers to defined contribution plans where workers are fully responsible for their retirement funds.
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Our research indicates that workers still need more education and guidance to help them make the right decisions to ensure they have sufficient savings for retirement.”

LIMRA, a worldwide research, consulting and professional development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness.Visit LIMRA at


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