The Frightening Facts About America's Retirement Crisis

Source: Flickr / Images of Money.

It's been four years since the Great Recession ended, but working Americans still find it hard to make ends meet. While the national unemployment rate has dropped appreciably from its highs since the recession officially ended in mid-2009, the jobs picture is still weak. Wages have stagnated, the plight of the long-term unemployed is still bleak, and young workers aged 20 to 24 years still have an unemployment rate of nearly 12%.  

As if all that wasn't depressing enough, the 2014 Retirement Confidence Survey tells us that not only are more workers living from paycheck to paycheck, but that a great majority of persons are carrying too much debt – with many saying their debt levels have increased over the past five years.

Both present and future are still clouded
The Employee Benefit Research Institute, which administered the survey, notes that an astonishing 36% of workers reported having less than $1,000 in savings or investments, higher than the 28% making this admission last year. Not surprisingly, this paltry level of savings was reported by 68% workers who earn less than $35,000 annually.

Workers in higher income brackets exuded more confidence when it came to retirement, too, with those making $75,000 or more per year showing increased confidence that they will experience a comfortable retirement. Overall, though, this metric was low. The 18% of all workers relating this sunny attitude is an improvement over the measly 13% the EBRI had measured from the years 2009 to 2013, certainly, but a far cry from the 27% reported in 2007.

Why are workers so ill-prepared for the future?
The biggest reason for the huge gap in what people have saved for retirement and what they really need to be saving seems to be this: they simply can't afford to save. The fact that the lowest-paid workers make up the majority of those will empty savings accounts speaks volumes. Indeed, survey respondents saying that they are not very or not at all confident that they will be able to retire comfortably is a stunning 43%. 

Another issue is that of debt. With 58% of those polled noting that they are worried about their level of debt, it's a sure bet that saving for retirement – or any reason – isn't on their agenda. Worse still, 24% say that their debt level is higher now than it was in 2009.

What can be done?
An interesting point brought out by this report is that having some type of retirement plan in place seems to spur people to save, and engenders a more positive attitude about retirement.

The survey points out that workers with a retirement plan had a confidence level of 24%, compared to only 9% of those that had no such plan. Only 11% of persons with a plan said they were not at all confident about retirement, versus 46% of those who had no retirement plan.

President Obama's new "myRA" plan, which targets workers who don't have access to a workplace plan, is a good start, but it's obvious that employers can do more to help their workers plan for the future. With only half of working Americans able to sign up for retirement plans where they work, business has an excellent opportunity to step up and make an investment in their own employees – as well as the nation's future.

The secret to building retirement wealth
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Read/Post Comments (19) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 23, 2014, at 6:05 PM, margor57 wrote:

    I don't mean to be rude but do you really expect American Businesses to step up and contribute to employee retirement(s) again. They pawned that responsibility off on us years ago and look at what it's done for the BOTTOM LINE. They could care less if we live in poverty the rest of our lives as long as there are enough consumers to fuel their bottom lines. In other words the retirement crisis is not of their making, it's of ours because we didn't save enough to retire. If we as employees were actually valued and treated as an asset as opposed to being a disposable commodity that may/might help some. The other issue is that WAGES have NEVER been sufficient for many folks to afford to save for retirement (something employers overlooked, and the gov't doesn't really care either). See we can raise the minimum wage all we want but the various corporations will simply pass that cost along to us as consumers making it a wash.

  • Report this Comment On March 24, 2014, at 10:19 AM, ohiodale wrote:

    You write half of the jobs do no offer retirement plans. Does this include minimum waged non career jobs. You should only be counting jobs that are career type jobs. Of course a fast food worker are not offered a retirement plan but I would argue most people do not work a fast food jobs for more than a year or 2. I truely do not know of a single job that is considered a career job that does not offer a 401k. The preivous comment by margor57 makes no sense and you can tell this person has zero business appitude. If business didn't make money the onwers, including shareholders, would invest in something else. I never understood people who think its bad that companies make a profit. Our president shares this same belief that profits are bad and look at our job market situation. The only way to give the employee power is to get unemployment down to 4%. Once there is a shortage of workers the employees will have the upper hand again.

  • Report this Comment On March 24, 2014, at 4:35 PM, mheitzman2 wrote:

    ohiodale, i'm afraid YOU are missing the point. What margor57 is saying is that employers used to offer a defined benefit plan for retirement (yes a true pension). they got out of that business out of pure greed in the 1980s and ushered in the far less attractive 401k plan wihch is an absolute joke in coparison. moreover, margr57 is absolutely right that it was done to feed the bottom line of big corporations and he/she is also right when he/she states that coporations treat their people like an expendable commodity rather than someone to value. back in the 1980s and prior people were honored and respected for working at the same company for 3-4 decades. today they want you out the door the minute you are too "old" or they feel they can replace you with a younger slave for half the wages.

    you must be very young ohiodale...margor57 is spot on with this assessment.

  • Report this Comment On March 24, 2014, at 9:43 PM, gayle wrote:

    The majority of career jobs do have retirement plans. Of course, many fast food workers don't have retirement plans but even Walmart and Target have retirement plans. The problem with any retirement plan is having the money to put in it. The other problem is we are being constantly told we need this huge amount of money to be able to retire comfortabally and we know there is no way we will ever save that much.

  • Report this Comment On March 25, 2014, at 2:03 AM, emailnodata wrote:

    Step one would be to simplify the system to where you just have a unique IRA that employers can contribute to if they wish, but is easily portable between employers or to your own business. No different than a back account, except it's a retirement account with those types of rules.

  • Report this Comment On March 25, 2014, at 2:08 AM, emailnodata wrote:

    BTW, this will seem harsh...but it's not the purpose of a business to provide healthcare, life insurance or retirement. Those used to be offered by employers as a "benefit package" that functioned as deferred pay....if you were taking a job, you'd always weigh "pay and benefits" if you were smart.

    Why did they do that? Well, for one, healthcare in those days was pretty inexpensive, and few workers had very expensive procedures done. Next, workers died about 2 years after retiring. So, all that "deferred pay" never got paid.

    As you know, now life expediencies are much longer, healthcare costs a fortune, and no business can really afford those expenses now.

  • Report this Comment On March 25, 2014, at 5:50 AM, kcisobderf wrote:

    "As you know, now life expediencies are much longer, healthcare costs a fortune, and no business can really afford those expenses now."

    Corporations have record cash, billions overseas, and most of the recovery went to the rich.

    Business can afford it, but instead want to hire H-1B visaholders.

    Either the country falls apart or the government grows some balls and gives an ultimatum: Either you hire and pay wages, or we tax the crap out of you to make sure the nation doesn't fail.

  • Report this Comment On March 25, 2014, at 6:27 AM, duudaa wrote:

    When I retire I will move in with my kids and go on welfare.

  • Report this Comment On March 25, 2014, at 8:07 AM, mf1040 wrote:

    How about taxing people on "NET" income, just like self-employed and businesses ? People should be able to deduct vehicle expenses for commuting to work, medical/dental/childcare expenses with no "threshold", education/new skills expenses with no threshold, meals during the work day, etc. In other words, the same deductions for salaried workers, that the self-employed and businesses get. Then, with the reduced TAX burden, they could actually save for retirement. Neither political party EVER talks about reducing taxes for middle class salaried workers, but if they did, they would be guaranteed to win elections !!

  • Report this Comment On March 25, 2014, at 9:21 AM, rocsoe wrote:

    Taken to the extreme, all workers cannot afford to retire today, even if they were all financially prepared. The economy won't allow it.

  • Report this Comment On March 25, 2014, at 9:29 AM, johnnywitt wrote:

    Just watch the movie "Inequality For All" by Robert Reich. Its available on Netflix Instant Watch. Pretty much sums up where we are at this point.

  • Report this Comment On March 25, 2014, at 9:50 AM, SLTom992 wrote:

    Our God Obama will save us. He will tell everyone that the economy is better and that unemployment is down. And all will rejoice and shout, "Hail Obama, our Lord and Savior" because he is so well known for his truthfulness.

  • Report this Comment On March 25, 2014, at 10:14 AM, Riggerwo wrote:

    I do not agree with some of the comments...but I will say this....Financial Management needs to be taught in High school...this needs to be a mandatory class!...the average American is very ignorant and misinformed when it comes to retirement. Many live way beyond their means...have large families...then they wonder why they have no money for savings. many again do not take advantage of company sponsored plans...To add to the pain..most companies now have done away with the old company retirement plans....placing a lot of it now on the worker to contribute to a 401K plan....while they continue to bank huge is all about returns..the worker has been marginalized. But lets face it..Americans are all about having things..stuff...large cars, large houses...usless gadgets..we are a consumer driven society...Retirement is something that happens a very long time into the future..and not on the avergae persons Radar until 10 -15 years is too late!

  • Report this Comment On March 25, 2014, at 10:37 AM, BiggR wrote:

    When are people going to stop blaming others (business, government, etc.) for their problems. Take some personal responsibility and fix your own problems. If you can't save for retirement, cancel your cable subscription and turn in your iPhone. I think you'll find the money for it then.

  • Report this Comment On March 25, 2014, at 10:55 AM, icarumba123 wrote:

    "Business has an excellent opportunity to step up and make an investment in their own employees – as well as the nation's future."

    Now THAT'S hilarious!! All big business cares about is their bottom line. Employees are just a necessary evil that business tries to eliminate at every turn. Sorry, they don't care about our nation's future either, unless it means making a buck for the shareholders.

  • Report this Comment On March 25, 2014, at 11:00 AM, Elektrawoman wrote:

    C'mon "the biggest problem is they can't afford to save?" Nonsense. They can afford car payments, mobile phones, chunky mortgages, iPads. I make $60k. I drive a 20 year old car, live in a 950 sq ft home, have a $99/year tracfone. And guess what? My retirement account is beautiful! Go figure.

  • Report this Comment On March 25, 2014, at 11:21 AM, themasteroflogic wrote:

    Yep Elektra and thanks to our 'foodlike' products you will probably get cancer by 55 and never get to spend a dime of those savings, and lived like a pauper for most of your working life to give it all to some insurance executive.

  • Report this Comment On March 25, 2014, at 12:13 PM, blairiy wrote:

    in this 14 billion year old universe, the whole concept of retirement is abstract. In our lifetime, it has become an expected norm. From the dawn of creation, you are born, you live, work then die. The so called "great generation", cabbaged in on retirement for a couple reasons.

    1. After WW2, all industrialized nations were bombed out except America, and our labor demanded and were given generous benefits. After 30 years of inflated expectations, other nations began making the same stuff, cheaper, and with improved quality, slowly put our mfg out of business.

    2. They saved every nickel and bought only with cash. They were reluctant to buy on credit. They could marry and begin housekeeping with the same bare bone budget as their parents and grandparents. Along came the microwave, dishwasher, telephone, mixers, cell phones, internet, Television, a car for all the family, etc, all of which our generation feel that we must have, so in lieu of retirement savings, we buy, on credit, and our payments consume our IRA stash.

    Even president hussein just stated, about Americans complaint about affording his health care, that Americans needed to reprioritize. How badly do we need that cell phone. Perhaps we need to spend instead on our health ins.

    3. If our labor does not wake up, and recognize this slide, we are going to negotiate all of us into the poor house. If I have 3 children, and their Christmas wish lists all include a bike. And I have $300 to spend on Christmas, do I buy a union made $300 American bike for them to share, or get each child their own $100 bike made in Asia? A no brainer. We Americans are trying to increase our standard of living, at the same time outsourcing the jobs to a country that will build a less expensive bike.

    In 2009, one of president hussein's first directives was to commission a treasury study to determine how much money Americans actually needed in retirement. Check out the recommendations of that study. There you will see where this is going. when he told Joe the plummer he wanted to spread your wealth around, it was the first hint of what he has planned.

    In this link to a report I saved from 2010, it speaks of GRA, Guaranteed Retirement Annuity. It finally made light of day as......MyRA. Check it out. Copy and paste this link in your browser:

  • Report this Comment On March 25, 2014, at 12:46 PM, staff1 wrote:

    'It's been four years since the Great Recession ended, but working Americans still find it hard to make ends meet'

    It’s not a lie if you believe it…It’s a recovery if you believe it??

    There is a simple solution to poor US job creation. Show me a country with weak or ineffective property rights and I’ll show you a country with a weak economy and high unemployment. It’s that simple.

    Just because they call it “reform” doesn’t mean it is.

    “patent reform”…America Invents Act, vers 1.0, 2.0, 3.0…

    “This is not a patent reform bill” Senator Maria Cantwell (D-WA) complained,

    despite other democrats praising the overhaul. “This is a big

    corporation patent giveaway that tramples on the right of small


    Senator Cantwell is right. All these bills do is legalize theft. Just because they call it “reform” doesn’t mean it is. The paid puppets of banks, huge multinationals, and China continue to brain wash and bankrupt America.

    They should have called these bills the America STOPS Inventing Act or ASIA, because that’s where they’re sending all our jobs. The present bill (vers 1, 2, 3, etc) is nothing less than another giveaway for huge multinationals and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated these bills will help them steal our inventions.

    Patent reform is a fraud on America. These bills will not do what they claim they will. What they will do is help large multinational corporations maintain their monopolies by robbing and destroying their small entity and startup competitors (so it will do exactly what they paid for) and with them the jobs they would have created. They have already damaged the US patent system so that property rights are teetering on lawlessness. These bills will only make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. In this way large firms are able to play king of the hill and keep their small competitors from reaching the top as they have. Yet small entities create the lion’s share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” Meanwhile, the large multinationals ship more and more jobs overseas. These bills are a wholesale destroyer of US jobs.

    Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Congress and Obama tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient.

    Those wishing to help fight big business giveaways and set America on a course for sustainable prosperity, not large corporation lobbied poverty, should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

    for a different/opposing view on patent reform, please see…

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2884811, ~/Articles/ArticleHandler.aspx, 9/5/2015 1:54:45 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Amanda Alix

Foolish financial writer since early 2012, striving to demystify the intriguing field of finance -- which, contrary to popular opinion, is truly what makes the world go 'round.

Today's Market

updated 4 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes