A recent study by AARP reveals concerning trends in retirement savings among American adults. The study found that 20% of adults aged 50 and older have no retirement savings, which experts warn could significantly burden future taxpayers. David John, senior strategic policy adviser at AARP, stated that 57 million private sector workers in the U.S. — approximately half of the workforce — are not offered a traditional pension or a retirement savings plan through their employer.
This issue has persisted for decades. According to John, individuals in their 50s or early 60s facing retirement without sufficient savings are in a crisis. “It’s not a crisis right now, but it will inevitably be,” John said.
If we’re not the ones with small retirement savings to supplement Social Security, we’ll be the ones paying the taxes to help those who didn’t have that opportunity.
Many states have responded by setting up or planning state-facilitated retirement savings plans. These programs are designed to help workers who do not have access to retirement plans at their place of employment.
American adults lacking retirement savings
For example, CalSavers, California’s retirement savings program, assists workers who cannot save for retirement through their employer. These programs are free to small businesses, which often struggle to offer retirement benefits due to limited resources. Greg McBride, chief financial analyst for Bankrate, pointed out that even without employer-sponsored plans, individuals can still save for retirement independently.
“Something lost on consumers is that lack of access to a retirement savings plan doesn’t mean that you can’t save for retirement on a tax-advantaged basis,” McBride said. He emphasized that if someone or their spouse has earned income, they can contribute to an Individual Retirement Account (IRA), which offers tax benefits. According to the IRS, there are several types of IRAs, including traditional IRAs, where contributions may be tax-deductible, and Roth IRAs, where donations are not deductible but qualified distributions may be tax-free.
McBride noted that many workers are not taking full advantage of these accounts despite these options. In conclusion, the lack of retirement savings among a significant portion of the American workforce is a looming crisis that could impact future taxpayers. However, with the right measures and awareness, individuals can still take steps to secure their financial future.
