The Growing Gap in Retirement Savings

The comments below are an edited and abridged synopsis of an article by MyBudget360

While there has been a strong bull market in stocks since 2009, 50% of American families have nothing to show for it. The gap between the retirement haves and have-nots has grown since the recession ended. Half of American families have no retirement savings, and many are going to rely on Social Security as they retire.

The Growing Gap in Retirement Savings | BullionBuzz
Cropped shot of a senior couple going through their finances while sitting at the dining room table

The Economic Policy Institute has data that highlights this growing gap. It shows that the only tier that is better off since 2007 is the 90th percentile. The rest of the US is maintaining a flat rate of growth in retirement savings; 50% of families have zero in retirement savings. This is why many retiring baby boomers are dependent on Social Security as their main source or retirement income.

Even though the US market has been on an epic bull run since 2009, many people are not reaping any benefits from that run. Things have recovered when looking at the stock indexes but, adjusting for inflation, people are way behind. Many are living paycheck to paycheck with no savings, and it’s clear that people are just treading water economically.

This trend will continue. Because many young Americans are saddled with high levels of student loan debt, their first priority is to pay off that debt. Putting money into a 401k is not on their to-do list. Americans need to understand why the gap is only going to grow with the rising levels of debt (credit cards, student loans, auto and mortgages).

The retirement system is not working well for most. Decades after 401k plans came into existence, people are not putting away enough money to secure a nest egg for their later years. We see those issues with older Americans as they enter retirement. At that stage, there is only so much you can do to get your savings up, given that your peak earning years are long gone.

The gap is growing and will continue to do so if the US continues on this path.

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