When it comes to finances, it seems that Americans are woefully unprepared for retirement, according to a 2015 report issued by National Institute of Retirement Security (NIRS). The Continuing Retirement Savings Crisis, states the typical American household was further behind in retirement readiness in 2013 than it was in either 2010 or 2007. As a matter of fact, nearly 40 million working-age households, accounting f or 45 percent of American households, do not own any retirement accounts at all.
The report, based on data from the 2013 Survey of Consumer Finances (SCF) from the U.S. Federal Reserve, found that the average working household has virtually no retirement funds put aside. Taking into account all households—those with retirement accounts set up and those that don’t have an account set up—the median retirement account balance amounts to just $2,500 for all working age households, and $14,500 for households nearing retirement age.
Even if they do have retirement accounts set up, Americans aren’t adequately prepared to maintain their standard of living after they quit the workforce. They simply don’t have enough saved. More than six in ten (62%) of working households in which members are between the ages of 55 and 64 have minimal retirement savings, less than one times the amount of their current annual income.
Higher-income-earning households are more likely to have retirement accounts in place. In fact, says the report, the households that do own retirement accounts have more than 2.4 times the annual income of households that don’t have retirement accounts set up.
Estimate of how much individuals need to save for a secure retirement vary and depend on several factors, including the rate of return on assets, age when saving begins and age of retirement. According to a