According to recent data from Fidelity Investments, it’s unlikely that many Americans are saving enough to live comfortably in retirement. As of March 31st, Fidelity reported that the median size of a 401(k) is only $24,400, with people over age 55 having saved an average of just $65,300.
Part of the problem is simply that many Americans are not investing enough. In one poll, 68% reported not being able to reach their monthly retirement goals due to other financial responsibilities. But other factors add to this ever-widening retirement gap. One trend that is preventing growth in America’s account balances is that many are using their retirement accounts as piggy banks during hard times. Early withdrawals incur government penalties on top of being taxed as income. In fact, in 2011 alone, the Internal Revenue Service collected $5.7 billion from these penalties, which suggests that Americans withdrew $57 billion from retirement accounts before they were supposed to.
This is a scary prospect for Americans, and in fact saving for retirement is the top financial concern for 59% of Americans according to a recent Gallup Poll. This financial worry even surpasses fears of not being able to pay for medical costs and not having enough money for children’s college. Gallup also reports that 48% of Americans say they would rely on a 401(k) account in retirement. But compare this percentage to those who actually do rely on their 401(k) and other retirement funds, which is currently just 22%.
Do you need to save more but aren’t sure where to start? If you need assistance assessing whether or not you are on track with your retirement goals, contact us. UPAL can help member physicians and their employee plan participants develop a savings plan. We would be happy to meet with you to discuss anything from practice cost reductions, to retirement plans, to traditional and Roth IRA’s, to personal investing accounts.
Sources: Gallup Survey http://www.gallup.com/poll/168824/fewer-rely-401-retirement-pre-recession.aspx?utm_source=alert&utm_medium=email&utm_campaign=syndication&utm_content=morelink&utm_term=Economy http://www.bloomberg.com/news/2014-05-06/early-tap-of-401-k-replaces-homes-as-american-piggy-bank.html http://topics.bloomberg.com/fidelity-investments/ http://www.bloomberg.com/news/2014-05-06/early-tap-of-401-k-replaces-homes-as-american-piggy-bank.html http://www.bankrate.com/brm/news/retirement/Oct_07_retirement_poll_results_a1.asp