Why Americans Still Aren't Saving Enough
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.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.