A large percentage of Americans still lack any retirement savings either through a 401(k) plan or IRA despite the advent of robo-advisors and budgeting apps.

Data from various sources show an alarmingly large percentage of consumers still have not started saving for their retirement. Nearly one-third of Americans have not saved anything for retirement and another third have not saved nearly enough, according to estimates by the Financial Services Roundtable, a Washington, D.C-based financial services trade organization. Four in ten people do not have a tax-free retirement account such as a 401(k) or IRA. As of mid 2015, 28% of households only saved for retirement through a 401(k) while 27% of people have both an employer plan and an IRA, according to the Investment Company Institute, a Washington, D.C.-based investment trade association. The data also showed that a mere 5% had an IRA only.

Underlying Issues

Stagnant wage growth over the past ten years, rising student loan levels and a lack of financial literacy all play a factor in this growing problem.

Many people have underestimated the amount of income they will need in retirement, especially since longevity is increasing, which exacerbates the issue, said Robert Johnson, president of The American College of Financial Services in Bryn Mawr, Pa.

“People are living longer and will even need more savings than the previous generation,” he said.

Instead of saving their pay increases and bonuses, too many people simply spend more money.

“Most people simply expand expenditures to meet the level of income,” Johnson said. “If people would exercise discipline and ‘pay themselves first’ by investing in their retirement accounts, they could make progress on the retirement income crisis.”

Two other sources of income many people consider as part of their retirement savings will not provide enough income, he said. Relying solely on Social Security is a fallacy, because they have not determined the actual amount of their payments and could be lower than they had expected.

Factoring in their home to “bail them out” during retirement is another misstep, he said.

“Unfortunately, studies show that home prices over the last 100 years have essentially risen with inflation,” Johnson said. “Stocks have appreciated much more than residential real estate over the past 100 years. Houses also need new roofs, require other maintenance and property tax payments.”

Even worse, many Americans are not saving at all and 63% of consumers lack the funds to pay for an emergency such as a $500 car repair or a $1,000 emergency room bill, according to a report by Bankrate.com, a North Palm Beach, Fla.-based financial content company. The survey revealed that 23% of people would lower their spending toward other things while 15% would rely on credit cards and another 15% would be forced to borrow money from friends or family members.

Consumers who are earning a higher wage barely fare better since only 46% of households making $75,000 a year and 52% of college graduates do not have the savings to pay for either emergency.

Part of the issue stems from a society which relies on constant instant gratification, said Jon Ulin, a managing principal of Ulin & Co. Wealth Management in Boca Raton, Fla.

“This savings epidemic is less about people’s income levels and more about their Pavlovian needs to spend money and release stress through spending,” he said.

Voluntary Retirement Plans Miss the Mark

While some experts have attributed the demise of retirement savings to the dwindling trend of companies offering pension plans, some of them have generated poor performances or have been raided.

“If you think about it, having your retirement rely on the sound management of a company or government 10 to 50 years from now is a big risk,” said Grant Easterbrook, co-founder of Dream Forward Financial, a new low-cost 401(k) plan based in New York.

“Ask the residents of Detroit or Illinois how they feel about their ‘guaranteed income’ right now” he said.

Working at the same company for several decades has also lost its appeal to many generations, especially Gen X-ers and Millennials, Easterbrook said.

The main reason Americans have fallen so far behind in accumulating money for retirement is because “we switched from a mandatory system to a voluntary one,” he said. “What made pensions so effective was the fact that no matter what employees had to give to the pension each paycheck, there was a pot of money for retirement.”

The retirement “crisis” exists, because 401(k) plans have failed to bridge that gap, Easterbrook said.

“In the current voluntary system, people don't save enough and there's not enough money when they retire,” he said. “401(k) plans are not effective at getting people to voluntarily save for retirement and that is the root of the problem.”

A large portion of Millennials were held back by skyrocketing college tuition and graduated with a large amount of student loans and faced a tough job market, pushing back their retirement savings even further, Ulin said.

Many Americans lack the motivation to save, because it is not a primary goal, said Ulin. Saving should become the priority with each paycheck they receive over spending the money.

“There is a huge mental disconnect today with Americans and their mindset on money,” he said. “People say that money can’t buy happiness, but it can buy financial freedom and help to secure your retirement which can lead to happiness.”