Editors' pick: Originally published July 8.
By and large, Americans are at a cross-roads with their retirement savings.
Study after study shows that U.S. workers just aren't putting enough cash away for retirement. Consider this recent study from economist Monique Morrissey of the Economic Policy Institute, which shows the median U.S. working household only has a paltry $5,000 stashed away for retirement. In addition, 70% of households have $50,000 or less saved for retirement.
Maybe that's why so many Americans are starting to lean on home equity to beef up their retirement income.
"Many people have to turn to home equity as part of their retirement plan, because typically half of their net worth is locked up in the form of home equity," says Stephen Chen, CEO of NewRetirement.com, an online tools, services and education platform that helps Americans retire securely. "People are living longer and just need more savings to fund their retirement."
Chen notes that 70% of households in the U.S. headed by people ages 55 to 64 have approximately $100,000 in savings outside of home equity, and only 9% have $500,000 in savings. "Consequently, most people haven't saved nearly enough and need to find other ways to fund retirement - working longer, downsize and relocate to a lower cost area or tap into home equity," Chen says.
The reason so many U.S. adults don't have adequate retirement savings is a common, yet highly harmful one, especially with Social Security seemingly in peril.