This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Americans Still Aren't Saving Enough

With private pensions largely disappearing and the long-term solvency of Social Security in question, paying for the bulk of retirement now sits squarely on the shoulders of many of today's workers. However, many policymakers and financial experts continue to report that workers are saving far too little and far too late.

Three recent studies attempt to provide some insight into the problem. Collectively, they suggest that while some pro-saving government policies may not be helping most workers reach their retirement targets, the savers who are meeting their goals may not be reliant on those incentives anyway.

Retirement savings lag and policies may not be helping

Retirement savings may be lagging in part because many workers underestimate how much money they will need to live comfortably once they stop working, according to a new study by LIMRA, a financial services industry organization.

Their survey found that pre-retirees between the ages of 55-70 believe, on average, they will need less than two-thirds of their current income once they stop working. However, the LIMRA study says that financial experts typically recommend workers should plan to live on 70 to 80 percent of their current income in retirement.

But unfortunately, tax policies intended to encourage saving may not be improving the situation, according to a new study by Harvard University. To encourage workers to save more, the U.S. government spends more than $100 billion a year in tax incentives for workers investing in accounts such as 401(k)s and IRAs. However, the Harvard study questions whether this money has actually spurred more savings.

Since U.S. data is "inadequate," according to the study, the researchers looked at data from Denmark to draw their conclusions. They found that although government subsidies encourage workers to put money in tax-advantaged funds, the incentives did not produce an overall increase in savings.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs